Who dares wins? China’s small banks beat ICBC, and state giants, turning brave bets into bonanzas

Name: Residents in China argue with guard to leave apartment blocks during deadly earthquake
Uploaded: 2022-09-11T23:30:30.000Z
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Bank of Chengdu and Bank of Jiangsu have risen at least 29 per cent this year, placing them among the top 10 performers on the CSI 300 Index

Regional lenders have less exposure to the property market and are thriving by serving industrially dynamic cities and provinces, analysts say

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A clerk counts renminbi banknotes at a bank outlet in Hai’an city in eastern China’s Jiangsu province. Photo: AP

Zhang Shidong

Published: 7:30am, 12 Sep 2022Updated: 9:28am, 12 Sep 2022

China’s property and banking sectors have had their fair share of bad news over the past year. While developers are facing an unprecedented liquidity squeeze, bad loans are multiplying at small regional banks and foreign funds are bolting.

Yet, some lenders are getting it right in the unfolding crisis, according to stock analysts. Bank of Chengdu, Bank of Jiangsu and Bank of Hangzhou grew their first-half earnings by more than 30 per cent, even as a fifth of their 40-odd listed peers reported shrinking profits.

Contrarian money managers who picked the trio over the nation’s big four banking giants have been richly rewarded. Shares of Bank of Chengdu and Bank of Jiangsu have risen at least 29 per cent this year, and were among the top performing CSI 300 Index members.

Others such as Bank of Nanjing and Bank of Hangzhou have risen more than 10 per cent, while the index has slumped 17 per cent.

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Residents in China argue with guard to leave apartment blocks during deadly earthquake

“Small banks, typically those in the [more prosperous] Jiangsu and Zhejiang provinces, are doing pretty well in boosting asset quality and controlling risks,” said Zheng Qingming, an analyst at Shenwan Hongyuan Group in Shanghai. “They will continue to take the lead against the backdrop of diversification of regional economies.”