Log in
E-mail
Password
Remember
Forgot password ?
Become a member for free
Sign up
Sign up
Settings
Settings
Dynamic quotes 
OFFON

4-Traders Homepage  >  Equities  >  SHANGHAI STOCK EXCHANGE  >  Bank of China Limited    601988   CNE000001N05

SummaryQuotesChartsNewsAnalysisCalendarCompanyFinancialsConsensusRevisions 
News SummaryMost relevantAll newsSector newsTweets 

China Banks See Slower Interest And Fee Income Growth

share with twitter share with LinkedIn share with facebook
share via e-mail
0
04/27/2012 | 02:05pm CET

-- China's five largest banks report combined first-quarter net profit of CNY208.94 billion

-- Interest and fee income growth decelerated in the first quarter

-- Analysts expect the banks to report net profit growth of 14% on average in 2012, down from 26% growth in 2011

(Combines earlier stories, adds a bank executive's comment in the 7th paragraph, adds analysts comments in the 8th, 9th and last paragraphs)

China's five largest banks continued to crank out bumper profit in the first quarter, but the key engines for their earnings growth, interest and fee income, started to run out of steam after supercharged expansion in recent years.

Friday, Industrial & Commercial Bank of China Ltd. (1398.HK), the largest bank by assets on the mainland, said its January-March net profit grew 14% to CNY61.34 billion ($9.77 billion). Net profit in China Construction Bank Corp. (0939.HK), Agricultural Bank of China Ltd. (1288.HK) and Bank of Communications Co. (3328.HK) rose by 9.2%, 28% and 20% to CNY51.51 billion, CNY43.45 billion and CNY15.88 billion respectively.

On Thursday, Bank of China reported a 10% gain in first-quarter net profit to CNY36.76 billion.

The results are strong compared to most of their Western peers that are still struggling with the anemic economic recovery in their respective markets. But their earnings reports offered some signs of uncertainty for China's banking sector as the world's second-largest economy continues to cool.

Highly dependent on making loans to fuel investment, banks' figures suggest they are taking a hit as businessmen grow cautious amid an economic slowdown.

While ICBC's net interest income earned on lending rose 16% to CNY98.82 billion, the rate slowed from a 25% rise in the year-earlier period. Bank of Communications' net interest margin, a key gauge of the profitability of banks' lending business, increased slightly to 2.60% in the first quarter from 2.59% in the fourth quarter of last year.

Given the current economic situation, "it's impossible to see a big increase in the bank's interest margin this year," said Yu Yali, chief finance officer at Bank of Communications.

"Net interest margins are likely to decline slightly across the board. We believe this reflects banks' ability to price loans has peaked or come under pressure amid weakening demand and continuing competition for deposits," Citigroup said in a recent note.

Analysts forecast China's five largest banks will report net profit growth of 14% on average in 2012, down from 26% growth in 2011.

Adding to the lackluster outlook is a sharp slowdown in banks' fee income growth. In recent years, Chinese banks have been gearing up to diversify their revenue streams into fee-based business segments, such as credit card and advisory services.

But higher consumer fees have fueled discontent against Chinese banks that have already come under criticism for enjoying a state-mandated fat interest margin and a lack of lending to small businesses.

In February, China's central bank, the state planning agency and the banking regulator barred bank subsidiaries from setting their own charges, stipulating that all service fees must be decided at the head office.

The move seems to have had some impact. ICBC's net fee and commission income grew merely 10% to CNY28.62 billion in the first quarter, down from the 42% increase in the year-earlier period. Such income posted by Bank of Communications Co. rose 22%, compared to 43% growth in the same period of last year.

"We're going to see a slowdown in the growth of Chinese banks' intermediary business segments this year due to a combination of relatively higher base numbers last year and stricter regulatory enforcement," said GF Securities analyst Mu Hua.

-Rose Yu and Yue Li contributed to this article, Dow Jones Newswires; 8621 6120-1200; rose.yu@dowjones.com

share with twitter share with LinkedIn share with facebook
share via e-mail
0
Latest news on BANK OF CHINA LIMITED
01/22 Bank of China officially opens branch in Serbia
01/20 China cuts reserve ratios for big five banks temporarily amid cash crunch-sou..
01/17 BANK OF CHINA : to establish deposit bank in Turkey
01/17 COFACE : s’allie à Bank of China
01/16 BANK OF CHINA : moves to electronic trade documentation with Bolero
01/14 Bank of China approved to open deposit bank in Turkey
01/13 BANK OF CHINA TO OPEN DEPOSIT BANK I : banking watchdog
01/13 BANK OF CHINA : to set up deposit bank in Turkey
01/13 BANK OF CHINA : Young, diverse, innovative and female
01/13 China's big banks, after record write-offs, poised for recovery
More news
Sector news : Banks - NEC
09:51p CITI UNITS TO PAY $28.8 MILLION FOR : watchdog
09:35pDJCITIGROUP : Units Settle CFPB Mortgage Servicing Claims for $28.8 Million
09:34pDJItaly's Generali Buys Voting Rights Worth 3% of Intesa Sanpaolo Share Capital
07:37pDJGoldman Sachs, Morgan Stanley, J.P. Morgan Executives Have Sold Almost $100 M..
01:46pDJJPMORGAN CHASE : Money-Fund Overhaul Gives Federal Home Loan Banks New Prominenc..
More sector news : Banks - NEC
News from SeekingAlpha
2016 CHINA BANKING SECTOR : Challenges In The Near Future
2016 How China Corporate Debt May Trigger A Banking Crisis
2016 Demographics Is Destiny - The Big Picture In China
2016 What You Need To Know About China
2016 Why Wells Fargo Is The Buffett Bank
Advertisement
Financials ( CNY)
Sales 2016 484 646 M
EBIT 2016 267 921 M
Net income 2016 166 588 M
Debt 2016 99 714 M
Yield 2016 4,82%
P/E ratio 2016 6,24
P/E ratio 2017 6,22
EV / Sales 2016 2,88x
EV / Sales 2017 2,79x
Capitalization 1 295 942 M
More Financials
Chart BANK OF CHINA LIMITED
Duration : Period :
Bank of China Limited Technical Analysis Chart | 601988 | CNE000001N05 | 4-Traders
Full-screen chart
Technical analysis trends BANK OF CHINA LIM...
Short TermMid-TermLong Term
TrendsNeutralNeutralBullish
Technical analysis
Income Statement Evolution
More Financials
Consensus
Sell
Buy
Mean consensus OUTPERFORM
Number of Analysts 16
Average target price 4,07  CNY
Spread / Average Target 16%
Consensus details
EPS Revisions
More Estimates Revisions
Managers
NameTitle
Si Qing Chen Vice Chairman & President
Jun Li Chairman-Supervisory Board
Guo Li Tian Chairman
Qingsong Zhang GM-Accounting & Information & EVP
Wan Ming Liu Member-Supervisory Board
More about the company
Sector and Competitors
1st jan.Capitalization (M$)
BANK OF CHINA LIMITED2.33%188 504
JPMORGAN CHASE & CO.-3.04%299 393
WELLS FARGO & CO-0.07%276 578
INDUSTRIAL AND COML BA..2.49%229 978
BANK OF AMERICA CORP2.44%227 591
CHINA CONSTRUCTION BAN..3.13%187 158
More Results