ICBC sees challenges ahead
By Michael Wei and Doug Young |
August 27, 2010, Friday
|
Print Edition
Print Edition
THE Industrial and Commercial Bank of China, the world's biggest bank by market cap, cited multiple factors as challenges in the second half of this year after posting a record quarterly profit on new lending and improved margins.
ICBC and other Chinese banks' recent profits have been turbocharged by government-directed lending in 2009, but uncertainties - from rising bad loans, to a slowing recovery in interest margins and a tightening regulatory environment - are mounting.
"In general, the implementation of industrial and regional development strategies will create large opportunities for the bank's development," ICBC said in a filing to the Hong Kong stock exchange yesterday.
"However, uncertainties in the domestic and international economic environment and increasingly rigorous financial supervision also present challenges to business expansion of domestic commercial banks," the Beijing-based lender said.
The bank said there were a number of factors to worry about, such as increasingly intense competition, pressure on an interest margin rebound, concerns over market liquidity as well as loans to local government and the property sector.
ICBC, in which Goldman Sachs, Allianz Group and American Express hold stakes, said net profit for the April-June quarter was 43.1 billion yuan (US$6.34 billion), compared with 31.27 billion yuan a year ago.
The profit compared with the 39.22 billion yuan forecast on average from seven analysts surveyed by Reuters and represents the bank's best quarter since it went public in 2006, surpassing last quarter's 41.6 billion yuan.
ICBC and other Chinese banks' recent profits have been turbocharged by government-directed lending in 2009, but uncertainties - from rising bad loans, to a slowing recovery in interest margins and a tightening regulatory environment - are mounting.
"In general, the implementation of industrial and regional development strategies will create large opportunities for the bank's development," ICBC said in a filing to the Hong Kong stock exchange yesterday.
"However, uncertainties in the domestic and international economic environment and increasingly rigorous financial supervision also present challenges to business expansion of domestic commercial banks," the Beijing-based lender said.
The bank said there were a number of factors to worry about, such as increasingly intense competition, pressure on an interest margin rebound, concerns over market liquidity as well as loans to local government and the property sector.
ICBC, in which Goldman Sachs, Allianz Group and American Express hold stakes, said net profit for the April-June quarter was 43.1 billion yuan (US$6.34 billion), compared with 31.27 billion yuan a year ago.
The profit compared with the 39.22 billion yuan forecast on average from seven analysts surveyed by Reuters and represents the bank's best quarter since it went public in 2006, surpassing last quarter's 41.6 billion yuan.
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