Agriculture Bank of China and China Minsheng Banking Corp got mainland banks' first-quarter results off to a good start as higher lending profitability and growth in fee income improved earnings.
Agriculture Bank, the third-largest mainland bank by assets, beat market expectations and posted a net profit of 34.07 billion yuan (HK$40.58 billion) for the first three months, up 36.41 per cent from the same period last year.
But analysts said the bank's drop in capital adequacy ratio - the reserves it must keep on hand against its risk-bearing assets - was a concern for investors.
The ratio slipped 0.19 percentage points to 11.4 per cent compared with the year to December. The bank's core capital adequacy ratio - a measure of highly liquid assets and cash - dropped 0.14 percentage points to 9.61 per cent by the same measure.
Michael Werner, a senior analyst at Sanford C. Bernstein in Hong Kong, said there might be several reasons for the drop, including a 6 per cent quarter-on-quarter growth in assets, which would translate into annualised growth of 26 per cent.
'It's hard to tell what is causing the bank's risk-weighted assets to grow but a stricter measure of risk-weighted assets with exposure to local governments could be one of them,' Werner said.
Beijing imposed stricter risk-weighting requirements on loans to local governments early this year which has affected capital adequacy ratios at lenders.
