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在线翻译:
szdaily -> Markets -> 
Nation’s top banks feel wind in their sails as profits rebound
    2018-03-29  08:53    Shenzhen Daily

TOP banks in China are reporting their best profit growth in three years on better net interest margins, with the government’s crackdown on shadow financing and high leverage expected to further drive recovery this year.

The strong 2017 results suggest that the government has been successful in pushing smaller lenders to cut their exposure to riskier financing practices — in turn helping reduce competition for the State-backed behemoths.

Over the past decade, small- and-mid-sized banks had been raking in more profits through aggressive lending via shadow-banking channels. But the tide has turned, with core banking emerging as the winner after the regulatory clampdown.

“The banks that will do well this year are those that have national franchises, ‘safe’ brands, relatively clean balance sheets, competitive products, sticky core deposits and strong credit skills,” said John Ott, partner with Bain & Company.

According to analysts, Industrial and Commercial Bank of China Ltd. (ICBC), China’s top bank by market capitalization, has produced the biggest earnings “beat” so far for 2017.

“We have a strong macro economic environment, a good [internal] mechanism, and an improving quality foundation for loans,” ICBC chairman Yi Huiman said Tuesday. “It can be expected that asset quality will continue to improve.”

ICBC reported a nonperforming loan ratio of 1.55 percent, versus 1.62 percent a year ago.

Analysts noted that the large gap between that ratio and a 1.26 percent ratio for loans more than 90 days overdue — a key point after which troubled loans are considered bad — suggests ICBC had been conservative in its provisioning and could have room to reduce the overall rate further.

Nonperforming loan (NPL) ratios also improved for China’s second and third largest lenders by assets, China Construction Bank Corp. (CCB) and Agricultural Bank of China Ltd. (AgBank).

AgBank’s NPL ratio fell to 1.81 percent from 2.37 percent, while CCB’s ratio slipped from 1.52 percent to 1.49 percent. This compares with an industry-wide level of 1.74 percent.

Banks’ balance sheets are also likely to get a boost from a recent relaxation of bad-loan buffer rules.

Earlier this month, regulators cut the reserves commercial banks must hold against bad loans from 150 percent to as low as 120 percent — the exact rate will be partly dependent on how quickly banks shed their bad loans.

ICBC, AgBank and CCB reported a combined net profit of 724 billion yuan (US$115.31 billion), up 4.1 percent on 2016, driven by a return to core lending businesses from fee-based incomes.

All three saw their best annual profit growth since 2015.

At ICBC, 2017 net fee and commission income fell 3.7 percent to 139.6 billion yuan, while at AgBank it fell 19.8 percent to 72.9 billion yuan. Their non-interest income, which includes private wealth management and investment banking fees, made up a lower percentage of their operating revenue.

The banks’ net interest margins, a key measure of profitability for banks’ most basic lending business, rose after years of weakness brought on by successive rate cuts.

Results from Bank of China and Bank of Communications Co. this week are expected to highlight a similar return to strength.

Because bigger banks hold greater deposits — the cheapest form of funding — and are less reliant on borrowing from the wholesale markets than smaller banks, they are better positioned to capitalize on rising market interest rates.

(SD-Agencies)

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