New | China’s Bank of Communications 2014 profits up, but behind 2013 pace

Deteriorating economic conditions in China took a toll in the last quarter of 2014 on Bank of Communication, the mainland’s fifth-largest commercial bank by assets.

The Shanghai-based lender reported 65.85 billion yuan in profits for 2014, an increase of 5.7 per cent from the year before, higher than a consensus of analysts had expected but also slower than 2013, when profits rose by about 7 per cent.

Non-performing loans at the bank rose rapidly. Bocom said its NPL ratio hit 1.25 per cent at the end of December, up from 1.17 per cent just three months earlier.

The bank’s net interest margin also suffered in the last quarter of 2014. That rate, a gauge on the profitability of loans, fell to 2.36 per cent from 2.4 per cent at the end of September.

Bocom has been at the centre of some speculation over mixed-ownership reform and the potential opening of the mainland securities sector to commercial banks.

A China International Capital Corp analysts on March 9 said that Bocom was eyeing a stake in mainland brokerage Huaying Securities. That rumour came just days after the China Securities Regulatory Commission said it was looking into the possibility of issuing securities licenses to banks. It also resulted in a major boost in share price for the bank, as well as for Industrial Bank, which was reportedly also in on the deal.