BoCom results improve despite bank being ‘under great pressure’

Bank of Communications, China’s fifth largest commercial bank, posted full year net profits for 2016 which were 1 per cent higher than the same period last year, beating analysts’ expectations.

The bank posted net profits of 67.2 billion yuan (US$9.8 billion) up 1 per cent compared to 2015’s 66.5 billion and better than the 1 per cent fall in profits expected by a Thomson Reuters poll of analysts.

“In the fourth quarter BoCom posted good fee income growth, its net interest margin rose by two basis points and its non performing loan ratio fell. This makes me think that things are bottoming out,” said Chen Shujin, a banking analyst at Huatai Research.

In terms of asset quality, Bank of Communications, which is also known as BoCom, had a non performing loan ratio of 1.52 per cent at the end of last year, up two basis points from the end of last year, but one basis point lower than the end of September.

This was achieved in spite of a difficult operating environment, Peng Chun, BoCom president and vice chairman, said in a press conference in Hong Kong on Tuesday.

‘“We were under great pressure… It was not easy for us to see improvements, which shows that our risk-control measures were working in last year’s tough asset-quality environment,” Peng said.

To say it in a good way, we were prudent, in a bad way, we were conservative.”