Banks’ earnings unlikely to get better
Print Edition
CHINESE banks are unlikely to see earnings improve this year because their asset quality is under pressure, rating agency Fitch said yesterday.
Fitch predicted a weakening in borrowers’ repayment ability, a further deterioration in asset quality amid the country’s economic slowdown, the pressure on banks from high leverage, and their potential exposure to liquidity conditions for the lenders’ situation.
Chinese banks suffered a slowing profit growth and an increase in non-performing loans last year, according to annual reports of listed banks.
So far 11 of the 16 listed banks have reported their results for last year, with only two recording double-digit net profit growth year on year.
The bad loan ratio for the banking system hit 1.25 percent at the end of 2014, up from 1 percent at the end of 2013, the China Banking Regulatory Commission said earlier.
“Although banks have been shoring up capital, their capital positions are unlikely to improve meaningfully as long as their loans and assets keep expanding at the current pace,” Fitch said.
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