Your current location is:{Current column} >>Text
China's largest banks signal tough times ahead By Reuters
{Current column}59People have watched
Introduction© Reuters. FILE PHOTO: A security guard wearing a mask following the coronavirus disease (COVID-19) ...

SHANGHAI (Reuters) - Five of China's largest banks have said the country's lenders face multiple headwinds this year that include the pandemic, global politics and domestic turmoil in the real estate industry.
On Wednesday, the world's largest lender Industrial and Commercial Bank of China (ICBC), warned that China faces "shrinking demand, disrupted supply and weakening expectations" in its annual earnings report.
Agricultural Bank of China (OTC:ACGBF) Ltd(AgBank) signaled the same in its full year report.
China's banking industry is facing "a more complicated and severe business environment," the country's second-biggest lender by assets, China Construction Bank (OTC:CICHF) Corp (CCB), said on Tuesday.
"The global epidemic will continue to recur, the easing policies of developed economies will be withdrawn, geopolitical conflicts will intensify," Bank of China (BoC) also said on Tuesday.
Meanwhile, the president of China's Bank of Communications Co Ltd (BoCom), on Friday said it would be difficult for the bank to deliver satisfactory earnings this year.
China has been battling a resurgence in COVID infections in some of its largest cities, which has led to partial and full-scale lockdowns which analysts say will be a drag on the economy.
The main impact on banks will be "rising loan delinquencies among service sectors", said Nicholas Zhu, a banking analyst at Moody's (NYSE:MCO).
"These industries include wholesale and retail, leisure travel and other consumer discretionary services," he added.
The banks' warnings about the difficult outlook came alongside full-year net profit figures from the five lenders which beat estimates.
ICBC's net profit increased 10.3% to 348.3 billion yuan, above estimates, while AgBank also outperformed.
It was the same story at BoC, CCB and BoCom.
SOUR DEBT
The non-performing loan ratios at four of the five lenders fell, though it increased at BoC.
However, corporate bad loans to the real estate sector jumped 98% at AgBank to 28.2 billion yuan, as developers continue to smart from stringent debt rules introduced last year. At CCB, real estate bad loans rose 50% on year to 13.5 billion yuan.
Since the introduction of the 'three red lines' rules on debt ratios last year, developers large and small have had cash flow issues.
However, large banks’ exposures to distressed developers such as Evergrande only account for a small proportion of their loan books and shareholders’ equity, said Zhu.
"The impact on some regional banks will be larger because of their portfolios’ higher concentration and fewer mitigants," he added.
The net interest margin, a key gauge of bank profitability, stood steady at all the lenders other than CCB.
($1 = 6.3673 Chinese yuan renminbi)
Statement: The content of this article does not represent the views of FTI website. The content is for reference only and does not constitute investment suggestions. Investment is risky, so you should be careful in your choice! If it involves content, copyright and other issues, please contact us and we will make adjustments at the first time!
Tags:
Related articles
4 big analyst cuts: Amplitude pelted with 3 downgrades after weak guidance By
{Current column}By Davit Kirakosyan-- Here is your Pro Recap of the biggest analyst cuts you may have missed since y ...
Read moreAirlines cancel over 600 flights in U.S. as thunderstorms hit Texas By Reuters
{Current column}© Reuters. FILE PHOTO: American Airlines flight 718, the first U.S. Boeing 737 MAX commercial flight ...
Read moreStock Market Today: Dow Racks Up Gains as Easing Inflation Triggers Tech Rally By
{Current column}© Reuters. By Yasin Ebrahim-- The Dow racked up gains Wednesday, as data pointing to signs of e ...
Read more
Popular Articles
- U.S. stock futures lift as banking fears ease By
- U.S. Weekly Crude Stocks Jump Nearly 5.5Mln Barrels, Gasoline Down Almost as Much By
- How Ahmaud Arbery's death changed a coastal Georgia community By Reuters
- Roblox, Sysco, Small Business Optimism: 3 Things to Watch By
- Oil prices muted after bruising week as economic concerns grow By
- Biden signs bill to boost U.S. chips, compete with China By Reuters
Latest articles
-
Dow futures edge higher but recession concerns limit gains By
-
Stock Market Today: Dow Stumbles on Micron Warning; Inflation Data Eyed By
-
Instant View: US CPI unchanged in July, raises hopes of Fed slowing By Reuters
-
McDonald's to start reopening restaurants in Ukraine By Reuters
-
Top 5 things to watch in markets in the week ahead By
-
European Stock Futures Edge Higher; U.S. Inflation Data Key This Week By