Agricultural Bank’s Q3 profit inches up 0.65pc, lifted by reduced costs, higher fee income
The Agricultural Bank of China said its net profit for the third quarter improved slightly year on year, as the bank managed to increase its fee income and reduce expenses, even as its lending businesses slowed.
Profit nudged up 0.65 per cent to 49.1 billion yuan during the three months through September from the year-earlier period, according to a filing.
Non-performing loans at were 2.39 per cent as of end September, little changed from its level of 2.4 per cent at the end of June. The banks said it has set aside cash reserves of about 173 per cent against the bad loans, which now amount to 229.8 billion yuan.
“Agbank’s NPL provision is very high. We are not especially concerned by that. The level of bad loans at Agbank has been high because it does more small and medium-sized enterprise and rural business. It has been reflecting the business performance where its branches are based,” said Shujin Chen, research director at DBS.
“Agbank’s pre-provision operating profits is weak this year because of the same reason,” Chen added.
Zhou Mubing, chairman of Agbank said in a statement the bank has been making an effort to increase its online business and upping its commission income. Agbank lowered its expenses by 12 per cent after a round of layoffs in the first half.
For the nine months ending September, total net profit edged up 0.5per cent compared to the same time last year, reaching 154.2billion yuan. Net interest income for the period was down 9.3per cent over the period, totalling 298.1billion yuan, while fees and commissions went up 9.8 per cent, to 73.1billion yuan.
Agbank’ shares closed 0.6 per cent higher in Shanghai before the results were announced. The shares ended Friday’s session down 0.3 per cent in Hong Kong ahead of the announcement.
This story has been amended to correct the percentage given for the change in net profit against the year-earlier period. The percentage figure has also been corrected in the headline.