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Profits at banks come under pressure
By Hu Xiaocen |
September 13, 2012, Thursday
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Print Edition
Print Edition
CHINESE banks will see profitability coming under pressure in the next three to five years amid a slowing economy, with smaller banks being hardest hit, Standard & Poor's Ratings Services said yesterday.
"Damage to China's top banks' balance sheets is about to surface because of a slowdown in China's economy since late 2011 and precarious global economic conditions," Ryan Tsang, credit analyst at the New York-based S&P said in a credit report.
The profit growth in Chinese commercial banks slowed by 13.1 percentage points to 26.3 percent in the first half of the year from the same period a year earlier, according to the People's Bank of China.
China's economy slowed to a 7.8-percent growth in the first six months and banks may see an easing in their profit expansion in line with the pace of economic growth, a PBOC official said earlier at a banking forum in Shanghai.
S&P said smaller banks without a competitive niche will be hardest hit by the weaker conditions, opening up opportunities for the larger and stronger banks to snap up smaller and weaker lenders to strengthen their market positions.
"We believe the top banks, particularly national banks and large regional banks, could spearhead massive market-driven consolidation,'' Tsang said. ''The pace of consolidation will hinge on the severity of the sector's credit downturn that's unfurling."
"Damage to China's top banks' balance sheets is about to surface because of a slowdown in China's economy since late 2011 and precarious global economic conditions," Ryan Tsang, credit analyst at the New York-based S&P said in a credit report.
The profit growth in Chinese commercial banks slowed by 13.1 percentage points to 26.3 percent in the first half of the year from the same period a year earlier, according to the People's Bank of China.
China's economy slowed to a 7.8-percent growth in the first six months and banks may see an easing in their profit expansion in line with the pace of economic growth, a PBOC official said earlier at a banking forum in Shanghai.
S&P said smaller banks without a competitive niche will be hardest hit by the weaker conditions, opening up opportunities for the larger and stronger banks to snap up smaller and weaker lenders to strengthen their market positions.
"We believe the top banks, particularly national banks and large regional banks, could spearhead massive market-driven consolidation,'' Tsang said. ''The pace of consolidation will hinge on the severity of the sector's credit downturn that's unfurling."
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