ICBC leads lenders in posting higher profit
Source: Bloomberg News |
November 1, 2012, Thursday
|
Print Edition
Print Edition
INDUSTRIAL & Commercial Bank of China Ltd led the nation's biggest lenders in posting profit that beat analyst estimates, defending their lending margins even as economic growth slowed to a three-year low.
The combined profit at China's four largest banks rose 15 percent to 189 billion yuan (US$30 billion) in the third quarter, almost triple the amount at the top four US banks and 3 percent more than the average analyst estimate compiled by Bloomberg News. Net income at ICBC, the world's largest bank by market value, rose 15 percent to a record 62.4 billion yuan.
The four state-owned lenders, which account for almost half of China's loans, have resisted government pressure to offer discounts to borrowers after the central bank narrowed the band between lending and deposit rates. The squeeze on profitability may worsen and defaults may rise further after the world's second-largest economy decelerated for a seventh quarter.
"The third-quarter results season tells us we do not need to be super bearish for these money-making machines," Victor Wang, a Hong Kong-based analyst at Macquarie Capital Securities Ltd, wrote in a note yesterday. While banks' "true bad loan ratios will continue to edge up and net interest margins will inevitably decline, the lenders have strong ability to manage their loan portfolio and sticky pricing power."
Although shares of Chinese banks have risen since mid-September, as the US unveiled a third round of quantitative easing and China's sovereign wealth fund said in October it will buy more shares, they still trade close to record-low valuations.
ICBC rose 2 percent in Hong Kong to close at HK$5.13 (66 US cents), taking this year's gain to 11 percent. China Construction Bank Corp, the nation's second largest by assets, gained 2.3 percent while the Agricultural Bank of China Ltd added 1.5 percent. Bank of China Ltd gained 2.2 percent.
The combined profit at China's four largest banks rose 15 percent to 189 billion yuan (US$30 billion) in the third quarter, almost triple the amount at the top four US banks and 3 percent more than the average analyst estimate compiled by Bloomberg News. Net income at ICBC, the world's largest bank by market value, rose 15 percent to a record 62.4 billion yuan.
The four state-owned lenders, which account for almost half of China's loans, have resisted government pressure to offer discounts to borrowers after the central bank narrowed the band between lending and deposit rates. The squeeze on profitability may worsen and defaults may rise further after the world's second-largest economy decelerated for a seventh quarter.
"The third-quarter results season tells us we do not need to be super bearish for these money-making machines," Victor Wang, a Hong Kong-based analyst at Macquarie Capital Securities Ltd, wrote in a note yesterday. While banks' "true bad loan ratios will continue to edge up and net interest margins will inevitably decline, the lenders have strong ability to manage their loan portfolio and sticky pricing power."
Although shares of Chinese banks have risen since mid-September, as the US unveiled a third round of quantitative easing and China's sovereign wealth fund said in October it will buy more shares, they still trade close to record-low valuations.
ICBC rose 2 percent in Hong Kong to close at HK$5.13 (66 US cents), taking this year's gain to 11 percent. China Construction Bank Corp, the nation's second largest by assets, gained 2.3 percent while the Agricultural Bank of China Ltd added 1.5 percent. Bank of China Ltd gained 2.2 percent.
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