China’s 16 banks re­port up­beat half-year per­for­mance

The Pak Banker - - Company+Boss News -

BEI­JING: China's 16 listed banks re­ported sig­nif­i­cant in­crease of prof­itabil­ity in the first half of this year thanks to a steady rise of net in­ter­est mar­gins of the banks, and saw de­cline of both the vol­ume of bad loans and the bad loan ra­tios, ac­cord­ing to half year re­ports of these banks.

An­a­lysts hold that the per­for­mance of listed banks is ex­pected to con­tinue to show fast growth in the sec­ond half of this year due to a higher scale of lend­ing than in the same pe­riod last year, fur­ther re­bound of net in­ter­est mar­gins, and sta­ble qual­ity of as­sets.

--Steady re­bound of net in­ter­est mar­gins Com­bined net prof­its of the 16 listed banks reached 343.398 bil­lion yuan in the first half of this year, up 45.75 per­cent year on year, and the rise of banks' prof­itabil­ity is mainly the re­sult of rise of net in­ter­est mar­gins.

Net in­ter­est mar­gins of the 15 listed banks (ex­clud­ing the Bank of Bei­jing) reached 2.67 per­cent, post­ing rel­a­tively rapid growth com­pared to the same pe­riod last year.

Ex­perts pre­dict that com­pe­ti­tion among the banks over ac­quir­ing de­posits will be even more fierce in the sec­ond half, so the cost of de­posits may in­crease.

How­ever, the bar­gain­ing power of the banks in grant­ing loans is ex­pected to con­tinue to strengthen in the sec­ond half, so net in­ter­est mar­gins of the banks should rise in a sta­ble fashion.

The bill fi­nanc­ing ra­tios of com­mer­cial banks for new loans dropped greatly since the sec­ond quar­ter of this year, while the scale of medium-and long-term loans with higher in­ter­est rates in­creased, which is also good news for banks look­ing to boost per­for­mance.

--Con­tin­ued im­prove­ment of as­set qual­ity Ac­cord­ing to banks' half-year re­ports, their gen­eral as­set qual­ity con­tin­ued to im­prove in the first half of this year, al­lay­ing fears that mas­sive lend­ing in 2009 might have in­curred a rise of bad debts. Of the 16 banks, 13 saw a de­cline in the scale of bad debts and in bad loan ra­tios in the first half from the start of the year. No­tice­ably, the bad loan ra­tios of the Shen­zhen Devel­op­ment Bank, the Bank of Ningbo, China Ever­bright Bank, and the China Mer­chants Bank all fell be­low 1 per­cent.

How­ever, out­stand­ing bad loans of the Bank of Com­mu­ni­ca­tions, the China Min­sheng Bank­ing Corp. and the In­dus­trial Bank re­bounded in the first half, in­creas­ing 324 mil­lion yuan, 115 mil­lion yuan, and 111 mil­lion yuan re­spec­tively, from the be­gin­ning of the year.

All listed banks raised their pro­vi­sional cov­er­age for losses in the first half, pro­vid­ing solid foun­da­tions for profit in­creases in H1. Thus far, only the pro­vi­sion cov­er­age of the Agri­cul­tural Bank of China's (601288.SH) fell be­low the floor level of 150 per­cent set by the bank­ing reg­u­la­tor.

Im­pact of bank­ing-trust co­op­er­a­tion limited The China Bank­ing Reg­u­la­tory Com­mis­sion (CBRC) re­leased the new rules on bank­ing-trust co­op­er­a­tion in Au­gust, urg­ing banks to trans­fer their off-bal­ance sheet as­sets that have been used for bank­ing-trust co­op­er­a­tion onto their bal­ance sheet by the end of 2011.

Ac­cord­ing to the lat­est statis­tics, the scale of trusted wealth man­age­ment prod­ucts is­sued via banks hit 2.8 tril­lion yuan, which pro­moted mar­ket wor­ries over fu­ture prof­itabil­ity of the banks. -PB News

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