Chinese lenders ICBC, Bocom and CCB defy expectations of decline in sector to post flat earnings growth for 2020
- We expect our asset quality will steadily improve, Bank of Communications’ executive vice-president says
- ICBC reports 1.4 per cent rise in net income to 317.7 billion yuan
Leading Chinese lenders Industrial and Commercial Bank of China (ICBC), Bank of Communications (Bocom) and China Construction Bank (CCB) defied expectations of a decline in the industry by reporting more than 1 per cent growth in full-year earnings for 2020 on Friday.
A recovery in China’s economy, which grew 6.5 per cent year on year during the fourth quarter, helped the three banks avert a full-year net profit decline, which would have been the worst pullback since the fourth quarter of 2008, analysts said.
The results also bucked a deterioration flagged by the country’s banking regulator in its quarterly report released in February, which pointed to a 2.7 per cent overall profit drop for the sector last year.
“While [the impact] from the pandemic has still not entirely disappeared, and we are likely to still face pressure on our ability to control the risks on asset quality in 2021, we do expect our asset quality will steadily improve,” said Yin Jiuyong, executive vice-president of Bocom.
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Last year, the Chinese government asked banks to sacrifice as much as 1.5 trillion yuan (US$229.3 billion) in profits to finance cheap loans, cut fees, defer loan repayments and grant more unsecured loans to help small businesses hit by the downturn caused by the coronavirus. The regulators said in January that banks have largely committed the full amount.
Net profit at Shanghai-based Bocom edged up 1.3 per cent from a year earlier to 78.3 billion yuan (US$12 billion), beating a consensus estimate of 70.9 billion yuan among seven analysts polled by Bloomberg. Its flattish bottom line was pressured by higher provisioning for loan losses, which totalled 56.3 billion yuan, up 15 per cent from a year earlier.