Search

ASIA
FINANCIAL SERVICES | Staff Reporter, China
Published: 02 Apr 13
274 views


China banks post healthy 2012 profits but half-decade slowdown lies ahead

Single-digit profit growth in next 5 years.

Here's more from BBVA:

Full-year 2012 financial results released over the past two weeks for the 16 listed banks (accounting for around two-thirds of outstanding bank credit in China) show moderating, but still-strong profit growth, along with healthy liquidity and capital adequacy ratios. The positive results are due to stable net interest margins, despite slowing domestic GDP growth and signs of deteriorating asset quality, and are broadly consistent with the sector-wide trends reported last month by the China Banking Regulatory Commission (CBRC) showing overall profit growth of 19%. Nevertheless, deteriorating asset quality is evident (particularly among the medium-size listed banks), a trend that is likely to continue over the next couple of years due to the recent rapid pace of credit growth and ongoing downshift in GDP growth. Given an expected further tightening of interest margins and regulations, we maintain our projection of slowing profit growth in the coming years.

Profit growth remained strong on stable net interest margins. Most listed banks posted double-digit profit growth rates in 2012, although the momentum has moderated. The strong outturns were partly the result of stable net interest margins, particularly for the large listed banks (ABC, BOC, ICBC, CCB and BoCOM). Net interest margins held up even amidst two asymmetric interest rate cuts in June and July, in which lending rates were effectively reduced by more than deposit rates. This outturn may be due to the stronger pricing power of the larger banks, enabling them to offer lower deposit rates than their smaller peers.

However, asset quality deteriorated. Non-performing loans (NPLs) of most listed banks increased in 2012 by varying degrees. In particular, the decline in asset quality was more pronounced for medium-size banks, most likely due to their higher exposure to private firms, which have been more susceptible to the economic slowdown than state-owned enterprises (SOEs).

The outlook is for declining profits in the years ahead. We maintain our projection of bank profit growth slipping to single-digits over the next five years from narrowing net interest margins (as a result of continuing interest rate liberalization), a downshift in GDP growth (to around 7.8% on average during 2013-17 from 9.3% in 2008-12), declining asset quality, and tighter regulations associated with capital requirements under Basel III and a clamp-down on off-balance-sheet activities to curtail the growth of shadow bank lending.  



Sign up for our newsletter

 

Do you know more about this story? Contact us anonymously through this link.

Click here to learn about advertising, content sponsorship, events & rountables, custom media solutions, whitepaper writing, sales leads or eDM opportunities with us.

To get a media kit and information on advertising or sponsoring click here.

Tags: China banks, profit growth, CBRC, asset quality, non-performing loans

LATEST FINANCIAL SERVICES JOBS »
  • No jobs posted on this category.
PRINT ISSUE »

Subscribe Now
Singapore singled out in Asia for weak M&A appetite

133 views

Is the KL-Singapore High-Speed Rail project still on the right track?

295 views

The changing taste of Asian art collectors bodes well for the Western art market

21 views

MOST READ EXCLUSIVES

The 10 richest Singaporeans

The 10 richest Singaporeans

Altogether, their total amount of wealth dropped by 20% to US$32.5 billion.

by KRISANA GALLEZO
13 Apr 2015 | 126492 views
 

Here are the credit card deals you shouldn't miss during the Great Singapore Sale 2015

Here are the credit card deals you shouldn\'t miss during the Great Singapore Sale 2015

The GSS begins today.

by MARIANNE ESTIOCO
29 May 2015 | 26699 views

Check out P&G Singapore’s new office with outdoor working spaces

Check out P&G Singapore’s new office with outdoor working spaces

It occupies 6 contiguous floors within The Metropolis.

by LEE ANNE BABIERRA
30 Apr 2015 | 23941 views
 

This retired banker's fintech startup makes complicated wealth management a piece of cake

This retired banker\'s fintech startup makes complicated wealth management a piece of cake

Mesitis provides low-cost aggregated wealth reporting for all investors.

by MARIANNE ESTIOCO
25 May 2015 | 8152 views

All the single ladies: Here’s Singapore’s first female-centric dating app for you

All the single ladies: Here’s Singapore’s first female-centric dating app for you

Its female-friendly features help women find serious daters.

by LEE ANNE BABIERRA
20 Apr 2015 | 7049 views
 

Get to know the husband-and-wife duo behind the novice 3E Accounting

Get to know the husband-and-wife duo behind the novice 3E Accounting

This local accounting firm expanded from 2 to 35 members in just 4 years.

by KRISANA GALLEZO
24 Apr 2015 | 6280 views

Take a sneak peek at Equinix’s $300m international business exchange data centre in Singapore

Take a sneak peek at Equinix’s $300m international business exchange data centre in Singapore

Which took almost a decade to finish.

by KRISANA GALLEZO
27 Apr 2015 | 4811 views
 

Check out this quaint co-working space that occupies 5 conservation shophouses

Check out this quaint co-working space that occupies 5 conservation shophouses

It has private offices, an events space, and even a beer garden.

by MARIANNE ESTIOCO
22 May 2015 | 4298 views

Hootsuite boosts its APAC team opening a new office in Singapore

Hootsuite boosts its APAC team opening a new office in Singapore

Its VP talks about the importance of the company’s culture in line with opening the new space.

by LEE ANNE BABIERRA
18 Jun 2015 | 2241 views
 

Get bitten by the travel bug in Skyscanner’s quirky Asia-Pacific headquarters

Get bitten by the travel bug in Skyscanner’s quirky Asia-Pacific headquarters

Meeting rooms are named after Asian tourist spots.

by MARIANNE ESTIOCO
5 Jun 2015 | 2174 views

Bye bye blurry video calls: Here’s a WebRTC startup that offers close to HD video quality using any device

Bye bye blurry video calls: Here’s a WebRTC startup that offers close to HD video quality using any device

Find out how they are building the next generation of web communications.

by LEE ANNE BABIERRA
2 Jun 2015 | 2005 views
 

Le Petit Paradis recently rebranded as Enoch’s European

Le Petit Paradis recently rebranded as Enoch’s European

It’s a full-fledged contemporary European restaurant blossomed from a motorcycle accident.

by KRISANA GALLEZO
22 Apr 2015 | 1864 views

HAITE Group launches its first aviation training center in Singapore

HAITE Group launches its first aviation training center in Singapore

It is the first major investment by a Chinese aerospace firm.

by KRISANA GALLEZO
13 May 2015 | 1651 views
 

El Mero Mero founder says Mexican food is not just about tacos and burritos

El Mero Mero founder says Mexican food is not just about tacos and burritos

See how a former legal professional pursued his passion for food.

by LEE ANNE BABIERRA
26 May 2015 | 1290 views

This bold ad film tells you what happens when maids are not given their due day off

This bold ad film tells you what happens when maids are not given their due day off

‘Mums & Maids’ generated 5 million views in 5 days.

by KRISANA GALLEZO
7 May 2015 | 1270 views
 

Fragrance Du Bois to launch a new scent this year

Fragrance Du Bois to launch a new scent this year

Also, check out its pop-up boutique at TANGS Orchard open until April 26.

by KRISANA GALLEZO
17 Apr 2015 | 1145 views

Singapore retailers turn to technology to boost productivity

Singapore retailers turn to technology to boost productivity

Shopping for the first child is always challenging for the parents.

by STAFF REPORTER
15 May 2015 | 1112 views
 

This app is out to prove that Singapore is anything but boring

This app is out to prove that Singapore is anything but boring

And Sugar helps SMEs in the process too.

by MARIANNE ESTIOCO
2 Jun 2015 | 1104 views

This handy app lets you book nearly any service under the sun

This handy app lets you book nearly any service under the sun

Find technicians, babysitters and more with Page Advisor.

by MARIANNE ESTIOCO
8 Jun 2015 | 1029 views
 

Hey, boss: This startup wants to be your all-around sidekick

Hey, boss: This startup wants to be your all-around sidekick

Alpha7 wants SMEs to join the Cloud.

by STAFF REPORTER
16 Jun 2015 | 915 views

Get your head in the game: Testing challenges await the Internet of Things

Get your head in the game: Testing challenges await the Internet of Things

Industry experts share their concerns over security and testing standards.

by LEE ANNE BABIERRA
4 Jun 2015 | 912 views
 

Megafash sets the stage for local entrepreneurs to introduce indie brands

Megafash sets the stage for local entrepreneurs to introduce indie brands

It plans to expand in Malaysia and Indonesia.

by KRISANA GALLEZO
20 Apr 2015 | 882 views

Former strategy advisor reveals aspirations with his newest mobile app startup

Former strategy advisor reveals aspirations with his newest mobile app startup

Rediscover and fall in love with your city all over again.

by LEE ANNE BABIERRA
22 May 2015 | 813 views
 

Need some help? This app lets you book a cleaner in five minutes flat

Need some help? This app lets you book a cleaner in five minutes flat

Sendhelper is the new breed of booking apps.

by MARIANNE ESTIOCO
26 May 2015 | 782 views

Leave your valuables unattended: This on-demand cleaning service offers $1m liability insurance

Leave your valuables unattended: This on-demand cleaning service offers $1m liability insurance

Book a reliable cleaner in seconds with Helpling.

by MARIANNE ESTIOCO
22 Jun 2015 | 591 views
 
close Don't Show Again

STAY INFORMED! Get our free weekly newsletter