Ping An Bank follows China Merchants Bank in reporting profit growth, as smaller lenders ride post Covid-19 rebound

Ping An Bank, China Merchants Bank and China Citic Bank have reported net profit growth of between 2 and 4 per cent recently

Profit for sector as a whole expected to drop by 1.8 per cent, watchdog says

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Ping An Bank, which reported its result on Monday evening, said its full-year profit had risen by 2.6 per cent. Photo: Bloomberg

Published: 10:00am, 3 Feb 2021Updated: 10:00am, 3 Feb 2021

Several Chinese mid-sized commercial banks have posted growth in net profit recently, on the back of a strong recovery in lockstep with the country’s economy in the fourth quarter.

Ping An Bank, China Merchants Bank and China Citic Bank have reported net profit growth of between 2 and 4 per cent for the full year. While the results of China Merchants Bank and China Citic Bank are preliminary, they provide an early glimpse of the health of their business before finalised results are released in late March, Ping An Bank’s figures are final.

These positive results have bucked the trend, because net profit for the banking industry as a whole, based on preliminary data, is expected to drop by 1.8 per cent for the full year of 2020, according to Liang Tao, the vice-chairman of the China Banking and Insurance Regulatory Commission. The NPL ratio for the sector stood at 1.92 per cent as of the end of 2020, slightly down from the 1.94 per cent – a 10-year high – recorded in June.

This is because some analysts and bank officials expect profitability at China’s big state-owned banks to be weighed down by sour loans in the aftermath of the coronavirus pandemic. The country’s banking sector is differentiated into the larger state-owned commercial banks and the smaller joint-stock banks. Joint-stock lenders such as Ping An Bank are not directly state-owned and count corporations as their shareholders.

According to estimates gathered by Bloomberg, net profit for the full year at China Construction Bank, Bank of China, Industrial and Commercial Bank of China and Agricultural Bank of China is expected to drop by between 6 and 8 per cent to 249.4 billion yuan, 169.9 billion yuan, 287.9 billion yuan and 194.7 billion yuan, respectively.

China Merchants Bank’s asset quality improved notably in the fourth quarter, Morgan Stanley analysts say. Photo: Bloomberg