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InvestmentsChina's top banks see third-quarter profits jump more than 10%, bad loans...

China’s top banks see third-quarter profits jump more than 10%, bad loans steady By Reuters


¬© Reuters. FILE PHOTO: A person sporting a masks walks previous the headquarters of the People’s Bank of China, the central financial institution, in Beijing, China, February 3, 2020. REUTERS/Jason Lee

BEIJING/SHANGHAI (Reuters) -Four of China’s largest state banks noticed third-quarter profits rise by more than 10% as bad loans held steady, whilst smaller lenders felt tremors from the continuing debt woes at developer Evergrande.

Industrial and Commercial Bank of China (ICBC), the world’s largest financial institution, reported on Friday a ten.6% rise in third-quarter internet revenue from a yr earlier, whereas Bank of China Ltd (BoC) stated its revenue climbed 13.2% and smaller Bank of Communications Co (BoCom) noticed quarterly revenue jump 37.9%.

They adopted stable outcomes from Agricultural Bank of China (OTC:) Ltd (AgBank) on Thursday, with a 14% rise in quarterly revenue.

The non-performing mortgage ratios in any respect 4 lenders fell barely or held steady on the finish of the third quarter in contrast with the top of the earlier three months.

However, total, internet curiosity margins – a key indicator of financial institution profitability – stabilised or slipped barely on the finish of the third quarter from the second quarter.

China Evergrande Group, as soon as the nation’s top-selling actual property developer, is reeling beneath more than $300 billion in liabilities, fuelling worries concerning the affect of its destiny on the world’s second-largest economic system in addition to on world markets.

Mortgage lending at BoCom elevated barely on the finish of the third quarter from a yr earlier, whereas the opposite three banks didn’t submit a breakdown on loans. Some native media stories stated that such lending elevated and rates of interest fell in some cities, an indicator of a marginal leisure of management over credit score to the sector.

SMALL BANK FORTUNES

While a latest string of developer defaults has had little affect on China’s largest lenders, for a few of their smaller friends it’s a completely different story.

The financing fashions of Chinese builders, together with Evergrande, relied on a continuing stream of recent gross sales and new fundraising to feed their operations. They rapidly bumped into bother when Beijing launched its so-called “Three Red Lines” guidelines final yr that capped the quantity of debt builders may tackle in comparison with the amount of money, property and fairness capital they held.

For many smaller provincial lenders, a bigger share of their mortgage portfolios are taken up by loans to builders and for mortgages than at greater banks. So latest liquidity problems with builders have had a huge impact on some smaller banks’ backside traces.

Evergrande’s “liquidity issue has adversely affected Shengjing Bank in a material way,” Evergrande Chairman Hui Ka Yan stated in a September assertion, after saying that the developer would promote a $1.5 bln stake in Shengjing Bank to assist repay its liabilities to the lender.

According to a letter from Evergrande to the federal government of southern Guangdong province that leaked in September final yr, many small provincial lenders had excellent loans to Evergrande as of the top of June 2020. Evergrande has denied the authenticity of the letter. Sources advised Reuters it was genuine.

Separately on Friday, China toughened guidelines for its globally systemically essential banks.

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