Citic Bank drops, plans to step up retail business

PUBLISHED : Saturday, 30 March, 2013, 12:00am
UPDATED : Saturday, 30 March, 2013, 4:33am

China Citic Bank's share price fell yesterday after it reported disappointing results for last year.

The stock fell 2.5 per cent to close at 4.67 yuan on the mainland stock market, after falling as much as 4.3 per cent intraday.

On Thursday, the bank reported net profit grew 0.6 per cent to 31 billion yuan (HK$38.3 billion) last year, owing to a 81.8 per cent jump in asset impairment loss.

All other Hong Kong-listed mainland banks reported net profit growth in double digits.

"Profit is not high for last year, but it is a healthy one," president Zhu Xiaohuang said yesterday.

Profit is not high for last year, but it is a healthy one
Citic Bank president Zhu Xiaohuang  

The bank is increasing its provision for loan impairment by 0.5 percentage point to 2.12 per cent of outstanding loans, closer to the official target of 2.5 per cent.

Zhu said the bank aimed to strengthen its risk management. "It is good for us to make such provision as early as possible, to achieve the 2.5 per cent level," he said.

The China Banking Regulatory Commission ordered banks this week to limit investments in non-standard credit assets that were not publicly traded to 35 per cent of all funds raised from the sale of wealth management products, or 4 per cent of the bank's total assets at the end of the previous year.

Citic Bank sold 151.5 billion yuan in non-standard wealth management products last year, representing 64 per cent of the total wealth management products sold, the bank said.

"Shadow banking is an innovative option for the huge demand for funding on the mainland," Zhu said, when asked his view on the new regulations.

Zhu said Citic Bank could not compete directly with big banks for large corporate clients, so it tried to attract more small and mid-sized corporate clients.

The bank aims to strengthen its retail banking business. Zhu said it would put more resources into developing online banking services.

The bank has no plans to raise capital now but will consider issuing subordinated debt.