Chinese banking majors deliver improved 2017 earnings
Three of mainland’s five biggest players benefit, so far, from the regulatory crackdown on shadow banking which has driven borrowers back to traditional lenders
Three of mainland China’s five biggest banks have posted improved earnings for 2017, after a national regulatory crackdown on shadow banking drove more borrowers back to traditional lenders.
Net annual profits at Industrial and Commercial Bank of China (ICBC), the nation’s largest bank by assets, grew to 286.05 billion yuan (US$45.6 billion), up 2.8 per cent than a year ago, it said in a filing to the Hong Kong stock exchange on Tuesday. Analysts had forecast the lender to report 2.5 per cent profit growth.
China Construction Bank, the second largest lender by assets, also reported that its net profits gained 4.7 per cent on year to 242.26 billion yuan last year.
The two results came a day after Agricultural Bank of China, the country’s third largest bank by assets, became the first of the “big-five” state-owned lenders to post annual figures. It showed faster-than-expected annual profit growth of 4.9 per cent to 192.96 billion yuan.
“The earnings reports of the big banks, so far, reflect stronger profitability as they shore up greater interest income from borrowers forced back to traditional creditors amid the crackdown on shadow banking,” said Zhao Yarui, a senior researcher at Bank of Communications in Shanghai.
She said the three majors are now benefiting from stronger deposit bases and lower savings costs, allowing them to ramp up lending yields, noting that the improving profit levels have also helped them built their up their capital reserves to counter bad loans.