China Bank Profits Slow
Macroeconomic headwinds and the ongoing pandemic have caused profits to slow for China’s listed banks, according to a recent Ernst & Young report.
China’s 36 listed banks saw net profits grow 5.04 percent and revenue grow 7.23 percent in the first quarter, a stark contrast to the 7.38 percent and 16.58 percent growth, respectively, registered in the same period last year.
The relatively decent performance, in light of ongoing tensions and the effects of the pandemic, was due to expanded assets from coronavirus-related lending and slower expense growth from reduced traveling and marketing costs, EY said.
Balance Sheet
Still, non-performing loans ratios remained stable having claimed 0.05 percentage point from December-end to 1.91 percent in March-end this year – the highest level since March 2009 according to data from the mainland’s regulator.
At 4.8 trillion yuan ($676.7 billion) of loan provisions, a 17 percent spike, EY said China’s 36 lenders were in a relatively healthy position compared to global peers, adding that the country was already at a more advanced stage of recovery with economic activities gradually recovering.
Shifted Focus
Balance sheet management and deployment are set to steer in a different direction as Chinese regulators recently signaled a partial shift in support from bad loans at small and mid-sized to credit for small and micro-sized businesses.
Plans have been drafted to restructure the smaller lenders through mostly «market-oriented» means.
