New | Bocom’s annual net profit inches up 1 per cent, in line with expectations

Bank of Communications reported Tuesday 2015 net profit rose 1 per cent to 66 billion yuan (HK$78.7 billion), in line with analyst expectations, yet the slowest pace of growth recorded at the bank in five years.

Net interest margin was down 14 basis points to 2.22 per cent, while net fee and commission income rose 18 per cent to 35 billion yuan.

The results come after a year in which China implemented five successive rate cuts, and removed the ceiling on deposit rates - narrowing interest margins banks can charge at a time when the economic slowdown pushed up non-performing assets across the banking industry.

Bocom’s non performing loans reached 1.51 per cent, a rise of 26 basis points from 2014. The industry average for mainland Chinese banks is 1.67 per cent.

“NPLs are still on a rising trend. The situation is an industry-wide issue,” Bocom’s Chief Risk Officer Yang Dongping said. “The increase in NPLs last year came on the back of the risk accumulated from the past three years. We see the highest risk among Eastern China small-medium sized companies, although there are also individual pockets of risks in the northern and south-western region showing deterioration .”

“While excess capacities is a macroeconomy-wide issue, there were corporates that have clearly over-expanded in recent years. These problematic companies are impacting businesses across entire supply chains.”