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Banking & Finance

ICBC, AgBank post better-than-expected Q3 net profit, while smaller rival Bank of China falls well short of estimates

All the nation’s “big-four” state-owned banks have now posted their quarterly results, after China Construction Bank last week reported Q3 net profits rose 4.1pc

PUBLISHED : Monday, 30 October, 2017, 9:23pm
UPDATED : Monday, 30 October, 2017, 9:27pm

China’s three biggest banks reported mixed quarterly figures on Monday, with Industrial and Commercial Bank of China (ICBC) and Agricultural Bank of China posting better-than-expected profits on improving assets quality for the third quarter, while smaller rival Bank of China fell short of expectations.

ICBC, China’s largest bank by assets, said net profit rose 3.4 per cent on year to 75 billion yuan (US$11.3 billion) for the three months through September. Forecasts had suggested a 2.5 per cent year on year profit rise.

ICBC’s non-performing loan ratio inched down to 1.56 per cent at the end of September, from 1.57 per cent a quarter ago, reflecting improving assets quality, the lender said in a Hong Kong stock exchange filing.

The bank’s third quarter results continued a stable and heathy development that is both “better than-planned” and “better than the same period a year ago,” reflecting strengthening business vitality, the Beijing-based bank said in a statement. “Asset quality is improving,” it added

Smaller rival Agricultural Bank of China (AgBank), meanwhile, the country’s third-biggest lender by assets, also reported net profit gained by a higher-than-expected 4.9-per cent to 51.4 billion yuan in the third quarter.

The Chinese banking industry as a whole is widely expected to post better results this year. The optimism is backed by an economy that is on a firmer footing and the deleverage drive that is beneficiary to their assets quarter in a longer term
Zhao Yarui, analyst at Bank of Communications in Shanghai.

The bank also struck a similar tone on improving asset quality and stressed strengthened reserves were in place as a buffer against risk. AgBank said bad loan ratio fell to 1.97 per cent at the end of September from 2.19 per cent a quarter ago.

Bank of China, however, the country’s fourth biggest lender by assets, said profit for the third quarter inched ahead just 0.1 per cent to 41.8 billion yuan as impairment losses eroded lending income. The result was way below the 8.8 per cent average profit growth estimate of four analysts polled by Reuters.

BOC’s non-performing loan ratio rose to 1.41 per cent at the end of September, from 1.38 per cent three months ago.

“The Chinese banking industry as a whole is widely expected to post better results this year,” said Zhao Yarui, an analyst at Bank of Communications in Shanghai.

“The optimism is backed by an economy that is on a firmer footing with a deleverage drive that will be beneficiary in a longer term.”

The industry average non-performing loan ratio has remained flat this year at 1.74 per cent, as the end of June, according to the latest available data from the China Banking Regulatory Commission.

All the nation’s “big-four” state-owned banks have now posted their quarterly results.

China Construction Bank, the second largest lender by assets, reported on Thursday Q3 net profits rose 4.1 per cent to 62.9 billion yuan.

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