Yang Yunfei

    Yyunfei@yahoo.com

    CHINA’S major listed banks reported slower net profit growth for 2014 as the world’s second-largest economy cooled, according to the latest report by global accounting firm PricewaterhouseCoopers (PwC).

    PwC’s report, based on the annual financial reports released by 12 major Chinese listed banks as of April 20, finds that these banks posted a combined net profit of 1.18 trillion yuan (US$190 billion) last year, an increase of 7.29 percent year on year.

    But the otherwise seemingly strong growth rate for many banks in other countries is nothing worth celebrating for Chinese lenders, as it was 5.26 percentage points lower compared with a year ago, meaning net profit growth in China’s banks is now in the single digits.

    By the end of 2014, the total assets of the 12 listed banks rose 10.63 percent year on year to 98.70 trillion yuan and the growth rate dropped slightly compared with a year ago, the report says, without providing a comparative figure for 2013.

    The report also shows that the 12 banks recorded a drop in return on assets and return on equity, and their balance of nonperforming loans (NPLs) and their NPL ratio both increased last year. The total NPLs of some banks in 2014 topped those in the previous three years combined, a PwC China partner said.

    China’s once robust economic growth slowed to 7.4 percent in 2014, its slowest rate of expansion since 1990 when it grew 3.8 percent, as authorities have started promoting a “new normal” of slower growth than in the past three decades of mostly double-digit expansion to focus on quality over quantity in the search for more sustainable development.

    A slowing economy, worsening asset qualities and larger provisions combined to impact the banks’ profit growth last year, said Raymond Yung, PwC China’s financial services leader, who expected China’s listed banks to report even slower profit growth this year under pressure stemming from the economic slowdown and competition unleashed by industry reforms.

    But Yung said that the Chinese banking industry will face more opportunities than challenges in the medium to long term as the country’s “One Belt, One Road” initiative boosts trade activity, mergers and acquisitions and funding needs, which will become new opportunities for banks.