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Moody's: Profit Pressures on Big 4 CN Banks Persist as Asset Growth Slows
Recommend 35 Positive 69 Negative 36 |
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Moody's issued a commentary on China's banking sector. The Big 4 Mainland banks, namely ICBC (01398.HK), CCB (00939.HK), ABC (01288.HK) and BANK OF CHINA (03988.HK), reported a combined 0.7% YoY drop in net profit in 1H24, with net interest income and fee income declining more sharply than the decline in credit costs and the increase in investment returns. The rating agency expected the profitability of these lenders to remain under pressure as net interest income continues to contract, while slower asset growth will reduce the pressure on capital from declining profitability. Moody's noted that overall asset quality at the Big 4 Chinese banks was stable in 1H, but there was some deterioration in their retail portfolios. non-performing loan (NPL) ratios declined moderately and provision coverage remained high. At the end of June 2024, the NPL ratios of the Big 4 lenders remained high at 4.9% to 5.5% of total loans, despite the fact that corporate real estate loans accounted for 3.9% of total loans. Asset quality for retail lending has declined significantly amid the slowdown in economic growth, with higher NPL ratios for mortgages, as well as higher (but still low) NPL ratios for retail operating loans and credit card loans. Still, Moody's projected asset quality at the Big 4 Chinese lenders to remain stable due to their asset diversification and relatively large loan loss provisions. AAStocks Financial News |
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