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Yahoo
30-04-2025
- Business
- Yahoo
Chinese Bank Shares Slump as Earnings Show Margin, Profit Pain
(Bloomberg) -- Shares of Chinese banks slumped following weak earnings, with analysts concerned the global trade war will further undermine their profit. New York City Transit System Chips Away at Subway Fare Evasion NYC's Congestion Toll Raised $159 Million in the First Quarter The Last Thing US Transit Agencies Should Do Now At Bryn Mawr, a Monumental Plaza Traces the Steps of Black History At the National Public Housing Museum, an Embattled Idea Finds a Home Lenders were the worst performers in the Hang Seng China Enterprises Index after some of them reported a drop in profit and lower margins. Industrial & Commercial Bank of China Ltd. fell as much as 6% in Hong Kong, after China's biggest bank saw its net income fall 4% in the first quarter. Shares in China Merchants Bank Co. and Postal Savings Bank of China Co. slid at least 5%. The financial health of Chinese lenders is being closely watched as Beijing gears up for a deepening trade dispute with the US. Banks' profits were already under pressure after China stepped up monetary stimulus late last year, lowering rates applied on loans and mortgages. Analysts are also worried the escalating trade war will hurt the banks' overseas business. Banks 'continue to face pressure of having to support the China economy amid an uncertain economic environment and this is evident in numerous banks reporting falls in net profits,' said Michael Chang, head of Asia financials at CGS International Securities HK. 'Net interest margins are still on a downward trajectory, with no signs of any bottoming amid likely continued monetary easing.' Chinese officials have indicated they may further loosen monetary conditions to bolster the economy, suggesting lenders will continue to face margin squeeze. China will lower reserve requirement ratio and interest rates based on domestic and international economic situation, to ensure ample liquidity, the People's Bank of China's Deputy Governor Zou Lan said at a briefing this week. The slide in banking shares drove a 0.4% drop in the Hang Seng China Enterprises Index, which underperformed the MSCI Asia Pacific gauge's advance. China Construction Bank Corp. saw a big decline as shares traded ex-dividend. 'Most of the big lenders saw a pretty big contraction in net interest margin from end of last year, largely thanks to mortgage loans repricing in January after earlier cuts in loan prime rates,' said Francis Chan, an analyst with Bloomberg Intelligence. 'The outlook for margins doesn't look so rosy either as there's bigger probability of more rate cuts this year.' --With assistance from Amanda Wang. (Updates with BI comment, shows China Construction Bank is trading ex-dividend.) Made-in-USA Wheelbarrows Promoted by Trump Are Now Made in China As More Women Lift Weights, Gyms Might Never Be the Same Why US Men Think College Isn't Worth It Anymore Eight Charts Show Men Are Falling Behind, From Classrooms to Careers The Mastermind of the Yellowstone Universe Isn't Done Yet ©2025 Bloomberg L.P. Sign in to access your portfolio
Mint
30-04-2025
- Business
- Mint
Chinese Bank Shares Slump as Earnings Show Margin, Profit Pain
(Bloomberg) -- Shares of Chinese banks slumped following weak earnings, with analysts concerned the global trade war will further undermine their profit. Lenders were the worst performers in the Hang Seng China Enterprises Index after some of them reported a drop in profit and lower margins. Industrial & Commercial Bank of China Ltd. fell as much as 5.1% in Hong Kong, after China's biggest bank saw its net income fall 4% in the first quarter. Shares in China Merchants Bank Co. and Postal Savings Bank of China Co. slid at least 5%. The financial health of Chinese lenders is being closely watched as Beijing gears up for a deepening trade dispute with the US. Banks' profits were already under pressure after China stepped up monetary stimulus late last year, lowering rates applied on loans and mortgages. Analysts are also worried the escalating trade war will hurt the banks' overseas business. Banks 'continue to face pressure of having to support the China economy amid an uncertain economic environment and this is evident in numerous banks reporting falls in net profits,' said Michael Chang, head of Asia financials at CGS International Securities HK. 'Net interest margins are still on a downward trajectory, with no signs of any bottoming amid likely continued monetary easing.' Chinese officials have indicated they will further loosen monetary conditions to bolster the economy, suggesting lenders will continue to face margin squeeze. China will lower reserve requirement ratio and interest rates based on domestic and international economic situation, to ensure ample liquidity, the People's Bank of China's Deputy Governor Zou Lan said at a briefing this week. The slide in banking shares drove a 0.7% drop in the Hang Seng China Enterprises Index, which bucked a broader advance in Asia. China Construction Bank Corp. shares plunged as much as 7.8% to wipe out this year's gain. (Updates with a chart, analyst comment.) More stories like this are available on First Published: 30 Apr 2025, 09:25 AM IST
Bloomberg
30-04-2025
- Business
- Bloomberg
Chinese Bank Shares Slump as Earnings Show Margin, Profit Pain
Shares of Chinese banks slumped following weak earnings, with analysts concerned the global trade war will further undermine their profit. Lenders were the worst performers in the Hang Seng China Enterprises Index after some of them reported a drop in profit and lower margins. Industrial & Commercial Bank of China Ltd. fell as much as 5.1% in Hong Kong, after China's biggest bank saw its net income fall 4% in the first quarter. Shares in China Merchants Bank Co. and Postal Savings Bank of China Co. slid at least 5%.
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
28-03-2025
- Business
- Yahoo
China Banks Ramp Up Bad Property Loan Disposals to Boost Economy
(Bloomberg) -- China's big banks are accelerating a drive to write off soured property loans to clean up their balance sheets as they heed calls by policymakers to back the world's second-largest economy. They Built a Secret Apartment in a Mall. Now the Mall Is Dying. Why Did the Government Declare War on My Adorable Tiny Truck? How SUVs Are Making Traffic Worse Trump Slashed International Aid. Geneva Is Feeling the Impact. These US Bridges Face High Risk of Catastrophic Ship Strikes Financial regulators have urged lenders including Industrial & Commercial Bank of China Ltd. in recent months to prioritize the disposal of non-performing real estate loans, according to people familiar with the matter. Some banks have this year doubled the annual quota at their local branches to write off such debt, the people said, asking not to be identified discussing a private matter. The instruction underscores the growing anxiety among policymakers as the years-long property crisis risks further eroding balance sheets and hampering the ability of banks to support areas more desired by Beijing. The banks are already struggling to eke out profits with record low margins and growing piles of bad debt. Officials are also working on plans to recapitalize all the biggest lenders. China's financial industry disposed of a record 3.8 trillion yuan ($532 billion) in bad assets in 2024, according to the banking regulator. While the official data didn't give a sector breakdown, analysts said loans to property developers account for a lion's share. The National Financial Regulatory Administration and ICBC didn't immediately comment. Fitch said the Chinese banks it covers had about 6% to 7% of their outstanding credit in property development loans, with the NPL ratio in that segment relatively stable at 4% to 5% in the past few years. A faster reduction in these loans means lenders will be able to free up resources to engage in other businesses, said the people. 'In the long run the move should result in cleaner and healthier balance sheets for banks, release some provision resources and allow them to focus better on expanding new businesses,' said Elaine Xu, director for Asia Pacific financial institutions at Fitch. But for lenders with relatively low provision coverage for bad loans, a rapid increase in write-offs could potentially hit their profits and capitalization in the short term, Xu added. 'Overall it's net positive.' Banks typically remove bad debt from their balance sheets by writing them off or selling them to bad asset managers. Write-offs have become mainstream in recent years, making up half of the total bad loans, while sales to bad banks account for 30%-40%, according to Fitch. Developers would still be responsible for any charged off debt, which banks can attempt to recover or engage third party debt collection firms. In September last year, Chinese policymakers pivoted to stimulating growth, giving a boost to consumption, investments and industrial production. But the real estate market remains under pressure with both new home sales and property development investment dropping in the first two months, official data showed. Bank of Communications Co., one of the nation's largest state-owned banks, cautioned last week on more bad loans from the property sector. Fitch expects the property NPL ratio at banks it monitors to remain stable at 4% to 5% this year, as the emergence of more bad loans will offset any efforts on speedier disposals. 'The cash flow of some developers hasn't yet fully recovered, and the sales of their projects haven't yet fully picked up,' said Gu Bin, Bocom's vice president, at its earnings briefing. 'Some loans in this sector still face the pressure of being downgraded to non-performing loans.' Bank of China Ltd. reported a 2.6% rise in profit for 2024 as a drop in impairments helped offset pressure from falling interest rates. The latest development will hopefully push down property NPL ratio at banks, in a bid to restore homebuyers' confidence in the real estate sector, the people said. An acceleration in property NPL write-offs would also help drive faster debt restructuring and asset sales by developers, which typically precede the sector's bottoming out, according to Raymond Cheng, head of China property research at CGS International Securities Hong Kong. 'The fact that China's authorities and financial institutions are determined to do this shows they're facing up to the reality and are confident the situation is manageable,' said Cheng. 'So it's going in the right direction. For investors, this probably also sends a signal that the property industry isn't far from the bottom.' Business Schools Are Back Google Is Searching for an Answer to ChatGPT A New 'China Shock' Is Destroying Jobs Around the World The Richest Americans Kept the Economy Booming. What Happens When They Stop Spending? How TD Became America's Most Convenient Bank for Money Launderers ©2025 Bloomberg L.P. Sign in to access your portfolio
