Two more banks ride to higher net earnings
By Zhang Fengming |
October 29, 2010, Friday
|
Print Edition
Print Edition
TWO more of China's big five banks yesterday posted higher quarterly earnings as they rode on the nation's economic growth and ample liquidity.
The third quarter net profits at Industrial and Commercial Bank of China, the world's largest lender, and Bank of Communications, the country's fifth biggest lender, soared over 20 percent.
Beijing-based ICBC's profit rose 27 percent to 42.6 billion yuan (US$6.4 billion) in the third quarter as expected, according to data subtracted from its quarterly report. Shanghai-based BoCom posted a 24 percent profit rise to 9.2 billion yuan, slightly off forecast.
"Economy of scale is one major contributor to the banks' rosy performance," said Zhang Jixiu, a Hongyuan Securities Co analyst. "Big banks are riding on a growing interest-bearing assets and the rising fee-based business."
The two banks followed the Agricultural Bank of China and Bank of China which both reported on Wednesday a better-than-expected rise in profits. China Construction Bank is set to post its third-quarter results today.
Banks are benefiting as China's relatively loose monetary policy makes loans easier to obtain.
Banks in China extended 6.3 trillion yuan of new loans in the first three quarters. China aims to limit the new credit at 7.5 trillion yuan this year after a sizzling new yuan loans of 9.6 trillion yuan were granted last year.
ICBC extended 843 billion yuan of new loans in the first three quarters, up 15 percent from a year ago. Its bad loan ratio fell to 1.15 percent from 1.54 percent at the end of September while BoCom's non-performing loans dipped to 1.22 percent from 1.36 percent.
Banks may still grow through widening interest spreads. China recently raised its interest rates for the first time in nearly three years.
"The lion's share of banks' deposits is less than one-year tenor while most of their loans are long-term," said Qiu Guanhua, a Guotai Jun'an Securities Co researcher. "So, the asymmetric rate rise will help banks increase interest spread as interest income outgrows their deposits costs."
The third quarter net profits at Industrial and Commercial Bank of China, the world's largest lender, and Bank of Communications, the country's fifth biggest lender, soared over 20 percent.
Beijing-based ICBC's profit rose 27 percent to 42.6 billion yuan (US$6.4 billion) in the third quarter as expected, according to data subtracted from its quarterly report. Shanghai-based BoCom posted a 24 percent profit rise to 9.2 billion yuan, slightly off forecast.
"Economy of scale is one major contributor to the banks' rosy performance," said Zhang Jixiu, a Hongyuan Securities Co analyst. "Big banks are riding on a growing interest-bearing assets and the rising fee-based business."
The two banks followed the Agricultural Bank of China and Bank of China which both reported on Wednesday a better-than-expected rise in profits. China Construction Bank is set to post its third-quarter results today.
Banks are benefiting as China's relatively loose monetary policy makes loans easier to obtain.
Banks in China extended 6.3 trillion yuan of new loans in the first three quarters. China aims to limit the new credit at 7.5 trillion yuan this year after a sizzling new yuan loans of 9.6 trillion yuan were granted last year.
ICBC extended 843 billion yuan of new loans in the first three quarters, up 15 percent from a year ago. Its bad loan ratio fell to 1.15 percent from 1.54 percent at the end of September while BoCom's non-performing loans dipped to 1.22 percent from 1.36 percent.
Banks may still grow through widening interest spreads. China recently raised its interest rates for the first time in nearly three years.
"The lion's share of banks' deposits is less than one-year tenor while most of their loans are long-term," said Qiu Guanhua, a Guotai Jun'an Securities Co researcher. "So, the asymmetric rate rise will help banks increase interest spread as interest income outgrows their deposits costs."
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