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Daniel Ren

Bank of Communications, mainland China’s fifth-largest lender, reported a modest increase in profit for the first half of this year as more people used their credit cards amid a crackdown on mobile-phone payment companies.
The Shanghai-based lender posted profit of 40.8 billion yuan (US$5.9 billion) between January and June, 4.6 per cent higher than a year ago and in line with analysts’ expectations.
“Its results are expected to set a tone for the whole banking sector’s performance for the January to June period,” said Ivan Li, an asset manager with Loyal Wealth Management.
Bocom said credit-card transactions in the first six months jumped 43.8 per cent year on year to 1.47 trillion yuan.
China, seen as a nation on its way to becoming a cashless society, has seen digital payment via mobile gadgets come to dominate shops, restaurants and cinemas over the past two years, eating into banks’ credit-card divisions.
China pulls further ahead of US in mobile payments with record US$12.8 trillion in transactions
But a government crackdown on the financial technology sector in the last few months has led to more and more reaching for the plastic to settle their bill.
Beijing has been conducting a thorough inspection of online payment firms nationwide since late 2017 after some of the 270 licensed providers were found to have settled payments for illegal transactions such as gambling. The central bank is expected to expel a certain number of payment service providers, according to sources with knowledge of the matter.
Bocom was the first of the country’s biggest five commercial lenders to publish their interim earnings.
The consensus forecast among analysts is that they will all report mild profit growth, benefiting from a rise in income from interest payments on loans.
For the first three months of the year, Bocom posted a 4 per cent profit rise from the same period of 2017.
Tightening regulations make fintechs easy takeover targets for banks stepping up digitalisation drive
It granted new loans worth 208.5 billion yuan to mainland-based businesses and individuals in the first half, Ren Deqi, president of Bocom, told reporters after the market closed on Thursday.
“Our pace of new loan growth was fast among the big banks,” he said. “It was aimed at supporting the development of China’s real economy.”
Beijing’s tightened oversight of the shadow banking system, which includes online peer-to-peer (P2P) lending platforms, resulted in stronger demand from businesses for traditional bank loans.
Shenwan Hongyuan Securities said income from interest would account for 70 per cent of mainland banks’ revenue in the first six months, up 3.1 percentage points from the end of last year.
The brokerage predicted that the mainland’s listed banks would post an overall 5.6 per cent profit rise for the first half, compared to 4.5 per cent earnings growth for the whole of 2017.
Joe Ngai, managing partner for Greater China at McKinsey, said the Chinese regulators’ stricter requirements for fintech licenses could give banks a good opportunity to take over technology start-ups to bolster their digitalisation drives.
Ren said digitalisation is one of the key tasks facing Bocom in the coming years as it seeks sustainable growth.


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Bank of Communications

Return of the credit card amid mobile-payments crackdown boosts Bank of Communications profit

The Shanghai-based lender posted profit of 40.8 billion yuan (US$5.9 billion) between January and June, 4.6 per cent higher than a year ago. Photo: Reuters

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China’s fifth biggest lender saw credit-card payments rise 44 per cent as Beijing makes life tougher for digital payment firms


Mobile payments

Return of the credit card amid mobile-payments crackdown boosts Bank of Communications profit

.css-1c6uqr6{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;overflow-wrap:break-word;}China’s fifth biggest lender saw credit-card payments rise 44 per cent as Beijing makes life tougher for digital payment firms

China’s fifth biggest lender saw credit-card payments rise 44 per cent as Beijing makes life tougher for digital payment firms