Mainland bank earnings reach record 1.04tr yuan

PUBLISHED : Monday, 20 February, 2012, 12:00am
UPDATED : Monday, 20 February, 2012, 12:00am


Mainland bank earnings reached a record 1.04 trillion yuan (HK$1.28 trillion) last year, up 15.8 per cent from 2010, according to data from the China Banking Regulatory Commission.

However, the pace of growth was much slower than the 34.5 per cent surge in earnings in 2010, but still faster than the 14.6 per cent increase in 2009.

Bad loans fell to just 1 per cent of banks' balance sheets last year from 1.1 per cent in 2010.

The average gap between lending and borrowing rates widened to 2.7 per cent from 2.5 per cent. Capital reserves climbed to 12.7 per cent of their balance sheets from 12.2 per cent.

The CBRC's banking data covers all the commercial lenders on the mainland.

On Saturday, the central bank said on its website that it would boost banks' lending capacity by 350 billion to 400 billion yuan by lowering capital reserve requirements by half a percentage point.

The move, the second in the past three months, is aimed at spurring lending amid complaints from small firms and developers about declining export demand and Beijing's monetary curbs to ease property prices.

The People's Bank of China had cut its capital reserve requirement by half a percentage point to 20.5 per cent in November, its first in three years.

Earlier this month, the central bank indicated that it would support first-time home purchases, sparking hopes of a rebound in property sales after a five-month slump.

Guo Qingping, an assistant governor, said the bank would continue to support the construction of affordable housing and ensure that demands for housing loans from first-home buyers were met.

According to property website Soufun, major banks in Beijing are now lending to first-home buyers at the 7.05 per cent benchmark rate, instead of 5 to 10 per cent above that.

Average monthly mortgage payments are expected to fall to 7,783 yuan as a result, from 8,212 yuan previously. And for a 1 million yuan mortgage with a 20-year term, the rate cut would result in savings of about 100,000 yuan in interest costs.

However, property agents say housing sales volumes are unlikely to rebound significantly as prospective homebuyers are expected adopt a wait-and-see stance.