Bank officials have expressed cautious optimism for 2021, believing that the worst of the pandemic’s impact on the quality of their assets has largely passed, thanks to the country’s economic rebound.
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On Tuesday, China’s six major state-trading banks released their annual results. On average, their fourth-quarter net income increased 60%, according to Chen Shujin, analyst at Jefferies.
Agricultural Bank of China net profit rose 1.8 percent to 215.9 billion yuan ($ 32.9 billion), beating the 6 percent drop predicted by analysts polled by Bloomberg.
Its non-performing loan ratio (NPL) rose to 1.57% last year, from 1.4% in 2019. The net interest margin, a key indicator of bank profitability, remained stable at 2.00%. 2% against 2.23% a year ago. .
The Bank of China, the country’s oldest and largest international lender, posted a 2.9% increase in net profit to 192.9 billion yuan from 187.4 billion yuan. The results beat the 8% drop to 172.69 billion yuan estimated in a Bloomberg poll.
Its NPL rose to 1.46% from 1.37% in 2019. The net interest margin remained almost stable at 1.85%.
Its full-year allowance charge for bad debts was 119 billion yuan, up about 16.5% from a year ago.
The outlook for this year looks better, some analysts say.
“We remain positive in the second and third quarters of 2021 … we see a great chance for banks to achieve double-digit profit growth in 2021 thanks to lower NPL formation and improved net interest margins, ”Chen said.
The newly formed NPL also eased among Chinese banks during the fourth quarter, from the peak seen in the second quarter of 2020, Chen said.
Separately, Bank of China Hong Kong, the city’s second-largest bank in terms of customer deposits, reported that net profit fell 17% to HK $ 27.9 billion from $ 33.6 billion. HK, missing the HK $ 28.1 billion consensus estimate polled by Bloomberg.
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