Agricultural Bank Q3 results beat forecasts
Profit grows 16pc as easing measures boost credit demand, helping lender follow Bank of China in beating forecasts
Agricultural Bank of China posted a forecast-beating net profit growth of 16 per cent in the third quarter from a year ago, and analysts think increased demand for loans on the mainland will buoy earnings this quarter.
The Hong Kong-listed bank, the mainland's third-largest lender by market value, posted earnings of 39.58 billion yuan (HK$48.8 billion) in the three months to September, up from 34.1 billion yuan a year earlier. The figure beat the 37.8 billion yuan average estimate by 10 analysts surveyed by Bloomberg.
Bank of China, the country's fourth-largest lender by market value, also posted a better-than-estimated third-quarter profit on Thursday.
The growth of Agricultural Bank's net profit was driven by net interest income, which rose 8.8 per cent to 85.55 billion yuan from a year earlier. Net interest margin, the spread between what banks earn from lending and their funding costs, stood at 2.82 per cent, an increase of 0.02 percentage point from a year ago.
Total loans grew nearly 11 per cent to 5.98 trillion yuan in the third quarter from the end of last year. The bank said fee income went up 8.4 per cent to 19.18 billion yuan in the third quarter from the year-earlier quarter.
The People's Bank of China's easing measures, including cuts in interest rates and injecting more liquidity in the system through so-called reverse repo operations, have boosted credit demand, said Kenny Tang Sing-hing, general manager at AMTD Financial Planning.
"The credit demand may continue to grow in the fourth quarter as funding for infrastructure projects will pick up after the 18th National Congress" to be held next month, he said.
Ben Kwong Man-bun, chief operating officer at KGI Asia, also expects Agricultural Bank's lending to continue to grow as the country's economy is likely to see a rebound in the fourth quarter.
Agricultural Bank's asset quality improved in the third quarter, with non-performing loans dropping to 83.95 billion yuan from 84.51 billion yuan at the end of June and the non-performing loan ratio decreasing to 1.34 per cent from 1.39 per cent at the end of June.
"Although the asset quality of the bank is better than expected, uncertainties in the global market will still cloud the [outlook for the] bank," Kwong said.
The bank's core capital adequacy ratio stood at 9.76 per cent, an increase of 0.26 percentage point from the end of last year.
Separately, Chongqing Rural Commercial Bank, a big lender to farmers and small businesses in southwestern China, also said yesterday that its net profit for the three months to September rose 28.6 per cent to 1.36 billion yuan from a year ago.
Net interest income reached 3.3 billion yuan, an increase of 21.4 per cent, while the net interest margin rose to 3.46 per cent from 3.44 per cent at the end of June, the bank said in a statement to the Hong Kong stock exchange.