Fees, interest margins and loans lift lenders
Eight of the nine mainland banks listed in Hong Kong will post an average year-on-year net profit growth of 32 per cent in the first quarter, Barclays Capital says.
In a report released this week, Barclays says the surge in earnings of Industrial and Commercial Bank of China, China Construction Bank Corp, Agricultural Bank of China, Bank of China, Bank of Communications, China Merchants Bank, China Citic Bank Corp and China Minsheng Banking Corp would mainly be driven by a growth in fee income, stable credit cost, moderate loan growth and expansion in net interest margin, a yardstick to measure a bank's lending profitability.
The report does not cover Chongqing Rural Commercial Bank.
Agricultural Bank yesterday said net profit in the quarter rose 36.4 per cent while Minsheng posted a 45.5 per cent increase.
The Barclays report says key areas to watch in the banks' first-quarter results would be the amount of loans to local governments and the progress made in capital-raising efforts by Merchants Bank, Citic Bank and Minsheng Bank.
It expects Citic Bank to underperform its rivals in net interest margin growth. Citic is expected to post a 0.18 percentage point rise in net interest margin from last year, far lower than the average growth of 0.31 percentage point forecast for the eight banks.
Ma Zhuangchun, a spokesman for Citic Bank, would not comment on the report because the bank has not announced its first-quarter results yet.
The mainland's banking regulator on Tuesday said it had not changed the rule on how much capital the country's five largest banks should hold against their risk-bearing assets.
'The banking regulator requires the five largest banks to maintain a minimum capital adequacy ratio of 11.5 per cent,' the China Banking Regulatory Commission said. 'The lowest requirement has not changed.'
The comments came after reports on Monday that the regulator had requested ICBC, CCB, BOC and Bocom to maintain a capital adequacy ratio of at least 11.8 per cent this year, while Agricultural Bank had been asked to target a ratio of 11.7 per cent.
