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Profit growth at Shanghai banks slows

BANKS in Shanghai posted a slowdown in their profit growth last year amid an economic downturn, the local banking regulatory said yesterday.

The city's banks raked up a combined record high profit of 70.86 billion yuan (US$10.4 billion) , the Shanghai Bureau of the China Banking Regulatory Commission said. Their profits last year grew 28.2 percent on year but sharply slower than the 75-percent growth the year before, the regulator said.

The regulator didn't give the reasons behind the fall in profit growth yesterday. However, the industry and analysts were not surprised as they had already expected a contraction in profit growth amid the slowdown and tighter interest spreads.

The People's Bank of China, the central bank, has cut interest rates five times since September, including a hefty 1.08 percentage points trim, the biggest in a decade. The rate cuts ate into banks' spreads and trim their main cash cow ?? interest income. And an ailing stock market has led to less buying of wealth management products.

Lenders in Shanghai still managed to cut their bad loan ratio by 0.62 percentage point last year to 1.51 percent. Total sour loans dropped 9.72 billion yuan to 36.54 billion yuan.

Elsewhere, the Shanghai Finance Services Office yesterday said the city has put issues like mergers and acquisitions, loans and tax-deferred pension products at the top of its financial agenda, underlining the importance it shows to bolstering its economy.

Tax-deferred pension products allow policy holders to deduct insurance payment as a before-tax expense and the scheme can cut an individual's tax burden.


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