 |
|
Clients walk into the Suzhou branch of
Bank of Ningbo in Suzhou, east China's Jiangsu Province, March 27,
2009.The bank, the first listed lender to file a mid-term report, said its
first-half profits would drop nearly 5 percent from a year earlier.
(Xinhua file photo)
Photo Gallery>>> |
BEIJING, June 29 -- Chinese listed banks, which have lent record high
amounts in the first half, are likely to report lower profit growth in the
period due to narrowing interest spreads and higher provisioning requirements,
industry analysts said.
"We are expecting a 7 to 8 percent year-on-year profit fall among the 14
listed banks in the first half-year," said Wang Liwen, banking analyst with
Shanghai-based Guotai Junan Securities Co, citing stretched interest spreads as
the major reason.
In 2008, the net interest rate spread for banks ranged from 2.45 percentage
points to 3.62 percentage points, with the average figure hovering around 3
percentage points. This year, as the government cut interest rates several times
to spur economic growth amid the global financial crisis, the net interest rate
spread is expected to be lower, at around 2.36 percentage points.
"A drop of 0.7 percentage points in the average net interest rate spread
could mean some 7-billion-yuan decrease in the interest yield for each trillion
yuan of new loans," said Wang.
Chinese banks extended a record 7.37 trillion yuan of new loans in the
first half, triple the amount offered in the same period a year earlier and 47
percent more than the government's full-year target, after lending restrictions
were eased in November to stem an economic slowdown.
However, most securities firms' reports said the country's 14 listed banks
might post an average profit decrease ranging from 6 percent to 10 percent
year-on-year in the first six months.
According to Wind Info, a financial data provider, the 14 listed banks
reported a net profit of 232.7 billion yuan in the first half of 2008, an
increase of 73 percent year-on-year. But this year, the net profit could
probably stand at 210 billion yuan, down 10 percent on a yearly basis.
Bank of Ningbo, for instance, on July 14 announced no more than a 5-percent
decease in net profit in its pre-released semi-annual report to the Shenzhen
bourse. It is the first Chinese listed bank to report a profit fall in the first
half.
Wang Yifeng, an analyst at TX Investment Consulting, said the improved
provision coverage ratio requirement might also cripple profits at listed banks.
To prevent potential risks arising from the lending spree, China Banking
Regulatory Commission raised the minimum provision coverage ratio requirement to
150 percent from 130 percent earlier this year.
"The increase will mainly eat into the profits of several large
State-controlled banks as they are still not up to the new requirements," said
Wang.
But as the squeezed spreads bottom out in the second half, most analysts
said listed banks would still post positive growth for the whole year.
"Thanks to the widened interest rate spreads and lower loan cost in the
following months, we are expecting a 10-percent growth in profits overall this
year," said Liu Yinghua, an analyst with Shenzhen-based Ping An Securities.
(Source: China Daily)
Special Report: Global Financial Crisis
