GDP growth helps 2 lenders cut NPLs

New Straits Times - - Business -

SHANG­HAI: Two of China’s big­gest lenders cut their bad­loan ra­tios as they notched im­proved prof­its last year, a sign that the na­tion’s bank­ing in­dus­try ben­e­fited from a re­bound late last year in the world’s sec­ond­biggest econ­omy.

Earn­ings re­ports the past two days from China Con­struc­tion Bank Corp and Agri­cul­tural Bank of China Ltd, the na­tion’s sec­on­dand third-largest lenders by as­sets, both beat an­a­lysts’ es­ti­mates, helped by a drop in ex­penses. The coun­try’s big banks are all re­leas­ing full-year re­sults this week, with Bank of China Ltd due to­day.

Be­fore this week, an­a­lysts had ex­pected the five largest lenders to re­port their first de­cline in com­bined an­nual profit since 2004. While the Con­struc­tion Bank and Agri­cul­tural Bank num­bers al­ready in­di­cate a bet­ter over­all out­come, some an­a­lysts re­main cau­tious on read­ing too much into the im­proved non-per­form­ing loan (NPL) fig­ures, amid mixed views on whether China’s econ­omy can sus­tain its fourthquar­ter re­vival.

“The im­prov­ing as­set qual­ity at banks nat­u­rally re­flects the eco­nomic re­bound last year,” said Larry Hu, head of China eco­nomics at Mac­quarie Se­cu­ri­ties Ltd in Hong Kong.

Ro­bust con­sump­tion and a man­u­fac­tur­ing re­bound helped China’s econ­omy grow a fasterthan-es­ti­mated 6.8 per cent in the fourth quar­ter. Still, the ful­lyear ex­pan­sion of 6.7 per cent was the slow­est since 1990, and economists in a Bloomberg News sur­vey ex­pect growth to weaken

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