China’s largest banks made profits last year, offsetting the narrowing of profit margins.
The country’s largest industrial and commercial bank said net income rose 0.5% to RMB 365.9 billion. Agricultural Bank of China said profits rose 4.7%, while profits for Chinese construction bank companies rose 0.9%.
The profit margins of the three banks are still shrinking from record lows, while asset quality has improved.
China’s policymaker hub has spurred growth in September and has taken comprehensive support measures, including cutting its lending advantages and mortgage interest. This is lenders lowering their loan yields, which squeezed their profit margins to record lows last year.
The result was in the Bank of China Ltd. and Bank of China.
The Bloomberg Intelligence Agency expects its margin pressure to continue until 2025, while the largest bank record rate has dropped by 13 to 16 basis points. The industry will also be associated with lower equity earnings as Beijing’s latest economic push could cause “collateral loss” by bringing rich credibility but at lower costs, analyst Francis Chan wrote in a note this week.
The asset quality of the banking industry is still under pressure. Although the real estate sector’s bad loan ratio has been lowered, their books have dragged down, officials warn that the real estate market may generate more bad debts.
Some loans in the space are still at risk of being downgraded to non-performing loans, as developers’ cash flows and sales have not recovered yet, said Gu Bin, vice president of Bocom. The Warrior vice president said in a briefing on Wednesday that BOC expects the “deep correction” in the real estate market to continue weighing its asset quality.
China’s big banks are accelerating the driver to write off sour real estate loans to clean up balance sheets in order to free up resources to lend to other key areas Beijing needs. Last year, the finance department got rid of a record 38,000 yuan, and loans to real estate developers accounted for the Lion’s share.
This article was generated from the Automation News Agency feed without the text being modified.
