Banking & Finance

Minsheng Bank Q3 profit rises 3.4pc, thanks in part to reduced tax bill

A battle amongst substantial shareholders for control of Minsheng Bank continues, prompting analysts’ concerns about effective leadership at the mid-sized lender

PUBLISHED : Friday, 28 October, 2016, 9:52pm
UPDATED : Friday, 28 October, 2016, 9:52pm

Minsheng Bank, which has been beset by a shareholder battle for management control, said its third-quarter net profit rose 3.4 per cent year on year, reaching 12.2 billion yuan, helped by a smaller tax bill compared to a year ago.

Minsheng’s net interest income for the quarter was down 0.2 per cent on year, reaching 23.5 billion yuan, while fee and commission income dropped 7.2 per cent to 11.9 billion yuan, according to a filing. The bank said it managed to lower its tax bill by 1 billion yuan, creating a 28.3 per cent saving which offset tumbling revenues.

“Minsheng’s problems have now surpassed beyond its business level to the management,” said Shujin Chen, research director at DBS Vickers.

Helped by the reduced tax bill, net profit was up 2 per cent for the nine months ending in September compared to a year ago, reaching 39.9 billion yuan. Non-performing loans were 1.57 per cent as of end September, compared to 1.67 per cent at the end of June.

Earlier this year, the bank was the subject of a dramatic bidding war between insurance companies and substantial shareholders, as the various parties wrestled for management control.

Insurance company Anbang emerged with a controlling 21 per cent of the bank’s mainland-listed shares, and a 5.2 per cent stake in its Hong Kong-listed shares. Anbang does not have outright majority control.

Meanwhile, Beijing-headquartered Huaxia Life and China Oriental group have not increased their shareholdings since the end of July. Both companies hold 7.1 per cent of Minsheng’s mainland traded shares.

“The bank does have a long-term strategy. There is a particular question on what is the president’s intended direction. He doesn't have a track record where we can tell what he intends to achieve,” Chen said.

Zheng Wanchun, 52, was appointed president of Minsheng in November 2015. Previously, he was a vice president at Industrial and Commercial Bank of China. There is little public information that explains what he did while at ICBC.

In Hong Kong,

Mainland billionaire Guo Guangchang hasn’t changed his Hong Kong shareholdings in Minsheng, which have held steady at 11.7 per cent since September 2015. More recently, a number of brokerages representing private investors have been accumulating Hong Kong shares in the bank since September.

Included among banks holding major stakes in Minsheng, are Goldman Sachs with a 11.3 per cent stake, JPMorgan with 10 per cent, Guotai Junan with 9 per cent, and Macquarie and Haitong each with 6 per cent. UBS has a 5 per cent stake in the mid-sized lender.