SPD Bank’s slow­ing prof­its may her­ald grim year ahead for bank­ing in­dus­try

China Daily (Canada) - - VIEWS - By JIANG XUEQING jiangx­ue­qing@ chi­nadaily.com.cn

China’s bank­ing in­dus­try re­ceived a wor­ry­ing new year wake-up call on Tues­day, with the first pre­lim­i­nary earn­ings re­port for the 2016 fis­cal year from a com­mer­cial lender show­ing a sig­nif­i­cant slow- down in profit growth.

Shang­hai Pudong De­vel­op­ment Bank Co Ltd, a joint­stock com­mer­cial lender head­quar­tered in Shang­hai, an­nounced on Tues­day a 4.93 per­cent growth in net profit at­trib­ut­able to eq­uity hold­ers in 2016, a record low since it was listed on the Shang­hai Stock Ex­change in 1999.

The net profit was 12.42 bil­lion yuan ($1.79 bil­lion) in the fourth quar­ter of 2016, a de­cline of 7.6 per­cent year-onyear.

Its neg­a­tive profit growth in the fourth quar­ter sent out a warn­ing sig­nal to the bank­ing in­dus­try.

Dur­ing months of the first nine last year, the four largest State-owned banks, in­clud­ing Bank of China Ltd and China Con­struc­tion Bank Corp, posted mod­est growth in net profit, rang­ing from 0.46 to 2.48 per­cent.

Their to­tal net profit amounted to 705.61 bil­lion yuan dur­ing the same pe­riod — an in­crease of just 1.08 per­cent year-on-year. This means they are likely to post a neg­a­tive profit growth for the year.

“The profit growth of most Chi­nese banks fell to a sin­gle digit and will even turn neg­a­tive, which truly re­flects the cur­rent state of the real econ­omy,” said Zeng Gang, di­rec­tor of bank­ing re­search at the In­sti­tute of Fi­nance and Bank­ing of the Chi­nese Academy of So­cial Sciences.

The re­struc­tur­ing of the real econ­omy made it dif­fi­cult for banks to con­tinue re­ly­ing on credit for in­come growth, he said.

The net in­ter­est in­comes of the four largest banks to­taled 1.2 tril­lion yuan in the first three quar­ters of 2016, down 7.77 per­cent year-on-year.

Newspapers in English

Newspapers from China

© PressReader. All rights reserved.