Special Report: Global Financial Crisis

    BEIJING, Jan. 20 -- Over 70 percent of the banks in Shanghai said their profits will not slide in 2009, according to a survey.

    About 30 percent of the banks surveyed said they expected their business performance for 2009 "will move on a sound track" with rising profits, while another 40 percent said their profitability "will maintain the same level as 2008", said the survey on Shanghai banks' Q4, 2008 performance, unveiled by the Shanghai Bureau of China Banking Regulatory Commission (CBRC) over the weekend.

    For banks, premium on interest rates between borrowing and lending still remains the biggest contributor for their future profit rise, followed by intermediary businesses and portfolio securities investment. And over 70 percent of the Chinese banks and 60 percent of foreign banks said they expect interest rate premium to be the major source for their 2009 profit rise.

    About 60 percent of the banks regarded the central bank's adjustments in the benchmark interest rate as the "major policy risk". The central bank announced five cuts in the benchmark rates between September and December last year to help boost China's domestic demand. In the latest one, effective from Dec. 23, the one-year lending and deposit rates were slashed by 27 basis points to 5.31 percent and 2.25 percent.

    The survey showed over 70 percent of Shanghai banks have a sound outlook for their property credit business in 2009, much higher than the result in Q3.

    Statistics from the Shanghai Bureau of CBRC showed that by the end of December last year, overall asset of all banks in Shanghai reached 5.23 trillion yuan (765 billion U.S. dollars), a rise of 11.1 percent over a year ago. Among those, foreign banks' assets in Shanghai reached 760.7 billion yuan, accounting for 56.57 percent of the overall foreign banks in China.

    Shanghai banks are witnessing a drop in their profits. In 2008, banks realized a net profit of 70.86 billion yuan, a year-on-year rise of 28.2 percent, lower than the 75 percent registered in the previous year.

    (Source: China Daily)