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Mint
29-04-2025
- Business
- Mint
China's ICBC Posts Profit Drop as Mega Banks Feel Margin Pain
China's Industrial & Commercial Bank of China Ltd. posted a decline in profit in the first quarter as interest rate cuts weigh on the nation's biggest lenders. Net income slid 3.99% to 84.2 billion yuan at China's biggest bank, according to a Tuesday filing. China Construction Bank Corp. posted a similar decline while Agricultural Bank of China Ltd. and Bank of Communications Co. reported small profit gains. Margins contracted for all the banks from the end of 2024. The results offer a pulse check on the nation's largest state lenders as China gears up for a deepening trade spat with the US. Beijing policymakers have vowed to 'fully prepare' emergency plans to counter increasing external shocks, including the creation of new structural monetary policy tools and policy-based financial instruments. Earlier stimulus to boost economic growth, including prime and mortgage rate cuts, has taken a toll on banks. The sector's margins have slid to the narrowest on record, and profits could be further squeezed after the central bank governor reiterated earlier promises to implement a moderately loose monetary policy. The US's tit-for-tat tariffs could deliver a 2.5% to 3% blow to China's gross domestic product, prompting more easing and exacerbating the margin woes for Chinese lenders, Bloomberg Intelligence analysts led by Francis Chan wrote in a note last week. The big four lenders led by ICBC could see a margin squeeze of 14 to 18 basis points this year, they added, worse than the consensus decline of up to 14 basis points. Nevertheless, China has worked toward beefing up capital buffers at the state lenders for them to better service the world's second largest economy. It kicked off the sale of special sovereign bonds on Thursday, including 165 billion yuan worth of the notes to fund banks' recapitalization. A total of 500 billion yuan of such bonds will be issued by June 4.
Yahoo
29-04-2025
- Business
- Yahoo
China's Big Five banks post slimmer margins as economic challenges persist
By Engen Tham and Selena Li SHANGHAI/HONG KONG (Reuters) - China's Big Five lenders on Tuesday reported narrower margins on their first-quarter earnings and some a drop in profits as the banking sector is hit by a protracted economic slowdown, with rising tariffs darkening prospects further. As the country's economically crucial property sector continues to reel under a debt crisis, developer defaults are also weighing on the earnings of large Chinese state-owned banks. "In the first quarter of 2025, the global economy lacked strong growth momentum," said China Construction Bank Corp in its first-quarter results, where it posted a 4% fall in net profit from a year before. "The prospects for global trade growth encountered numerous challenges, including rising tariffs." America and China are locked in a tit-for-tat tariff war which has increased business volatility and reduced trade between the world's two largest economies. Industrial and Commercial Bank of China (ICBC), the world's largest lender by assets, and Bank of China posted first-quarter profit drops of 4% and 2.9% respectively from a year before. All three lenders saw falling margins. "Growth of micro and small enterprises (MSE) loans is slowing, but remains rapid. We expect the related asset risks to gradually emerge in step with the slowdown of economic growth facing the headwind of tariff shocks," said Nicholas Zhu, an analyst at Moody's. While China's Bank of Communications (BoCom) and Agricultural Bank of China (AgBank) logged slight rises in first-quarter net profit of 1.5% and 2.2%, respectively, margins also fell at both lenders. For all banks, non-performing loan ratios remained either steady or fell slightly. But in the coming months, NPLs across the board are likely to rise, said analysts. "Asset risks will be high, because of unseasoned risks from financing China's economic transition to high-end manufacturing, technology and clean energy industries," said Zhu. MORE STIMULUS Chinese banks' profitability is expected to be further squeezed by potential cuts to key interest rates this year. Beijing has kept the country's lending rates steady for the sixth successive month, but markets wager more stimulus is likely in coming months to keep growth on an even keel amid an intensifying Sino-U.S. trade war. "While lower rates might reduce debt servicing costs for borrowers, they would also compress banks' net interest margins, further decreasing profitability," said Zhu. In March, four of China's largest state-owned banks said they plan to raise a combined 520 billion yuan ($71.60 billion) in private placements from investors, including the finance ministry, after Beijing pledged to help them support the economy. Asia-focused HSBC on Tuesday warned that loan demand and credit quality could suffer from the broader fallout of U.S. President Donald Trump's global trade war, signalling tougher times for trade-focused banks. The bank's CEO said there was "a significant drop in volumes along the U.S.-China corridor in the sectors that have not been given a waiver or the reduction of tariffs". He did not elaborate. ($1 = 7.2682 Chinese yuan renminbi) Sign in to access your portfolio
Reuters
29-04-2025
- Business
- Reuters
China's Big Five banks post slimmer margins as economic challenges persist
Summary Companies China's Big Five banks log thinner margins First-quarter profits fall for three lenders on year Non-performing loan ratios mostly flat SHANGHAI/HONGKONG, April 29 (Reuters) - China's Big Five lenders reported narrower margins at the end of the first quarter on Tuesday, as profits fell for some on the slowing economy under the shadow of rising tariffs. As the property sector continues to struggle, developer defaults are also weighing. The Reuters Tariff Watch newsletter is your daily guide to the latest global trade and tariff news. Sign up here. "In the first quarter of 2025, the global economy lacked strong growth momentum," said China Construction Bank Corp ( opens new tab, in its first-quarter results, where it posted a 4% fall in net profit from a year before. "The prospects for global trade growth encountered numerous challenges, including rising tariffs." America and China are locked in a tit-for-tat tariff war which has increased business volatility and reduced trade between the nations. Industrial and Commercial Bank of China (ICBC) ( opens new tab, the world's largest lender by assets, and Bank of China ( opens new tab followed suit, posting first-quarter profit drops of 4% and 2.9% respectively from a year before. All three lenders saw falling margins. "Growth of micro and small enterprises (MSE) loans is slowing, but remains rapid. We expect the related asset risks to gradually emerge in step with the slowdown of economic growth facing the headwind of tariff shocks," said Nicholas Zhu, an analyst at Moody's. While China's Bank of Communications (BoCom) ( opens new tab, and Agricultural Bank of China (AgBank) ( opens new tab logged slight rises in first-quarter net profit of 1.5% and 2.2% respectively, margins also fell at both lenders. For all banks, non-performing loan ratios remained either steady or fell slightly. But in the coming months, NPLs across the board are likely to rise. "Asset risks will be high, because of unseasoned risks from financing China's economic transition to high-end manufacturing, technology and clean energy industries," said Zhu. ($1 = 7.2682 Chinese yuan renminbi)
Business Times
29-04-2025
- Business
- Business Times
China's Big Five banks post slimmer margins as economic challenges persist
[SHANGHAI/HONGKONG] China's Big Five lenders reported narrower margins at the end of the first quarter on Tuesday (Apr 29), as profits fell for some on the slowing economy under the shadow of rising tariffs. As the property sector continues to struggle, developer defaults are also weighing. 'In the first quarter of 2025, the global economy lacked strong growth momentum,' said China Construction Bank Corp in its first-quarter results, where it posted a 4 per cent fall in net profit from a year before. 'The prospects for global trade growth encountered numerous challenges, including rising tariffs.' America and China are locked in a tit-for-tat tariff war which has increased business volatility and reduced trade between the nations. Industrial and Commercial Bank of China (ICBC), the world's largest lender by assets, and Bank of China followed suit, posting first-quarter profit drops of 4 per cent and 2.9 per cent respectively from a year before. BT in your inbox Start and end each day with the latest news stories and analyses delivered straight to your inbox. Sign Up Sign Up All three lenders saw falling margins. 'Growth of micro and small enterprises (MSE) loans is slowing, but remains rapid. We expect the related asset risks to gradually emerge in step with the slowdown of economic growth facing the headwind of tariff shocks,' said Nicholas Zhu, an analyst at Moody's. While China's Bank of Communications (BoCom) and Agricultural Bank of China (AgBank) logged slight rises in first-quarter net profit of 1.5 per cent and 2.2 per cent respectively, margins also fell at both lenders. For all banks, non-performing loan ratios remained either steady or fell slightly. But in the coming months, NPLs across the board are likely to rise. 'Asset risks will be high, because of unseasoned risks from financing China's economic transition to high-end manufacturing, technology and clean energy industries,' said Zhu. REUTERS
