The Bank of China (BOC) and the Bank of Communications (BoCom) reported slower growth in net profit in the first quarter of this year as the Chinese economic expansion slowed. BOC reported a 8.2% rise in net income in the first three months to CNY39.8 billion, compared with 9.9% a year earlier. Non-performing loans (NPL) stood at CNY66.4 billion at the end of March, up from CNY65.5 billion at the end of last year. The NPL ratio dropped 0.04 percentage points to 0.91%, as local-currency loans grew 4.02% over the quarter. The net interest margin, a key measure of lending profitability, increased by 0.07 percentage point to 2.22% over the quarter, helping the bank’s net interest income to grow 10.5% year-on-year to CNY66.96 billion in the first quarter. Bank of China (Hong Kong)’s first-quarter operating profit before impairment allowances grew 3.4% from a year earlier to HKD6.9 billion. Operating expenses fell 12.3% from the previous quarter, owing to lower staff costs and business related-expenses, the bank said.

Industrial and Commercial Bank of China (ICBC) said its net earnings rose 12.08% year-on-year to CNY68.74 billion on robust growth in net fee and commission income, dropping from the 14.5% rate for all of last year. ICBC’s net interest income grew 8% from a year ago, and its net fee and commission income jumped 19%. Loans and advances grew 5.24%. By the end of last month, the bank’s non-performing loans (NPL) increased 7.6% over the quarter to CNY80.2 billion, and the NPL ratio rose 0.02 percentage point to 0.87%. Provisions for loan impairment losses increased 4.9% over the quarter. China Construction Bank’s net interest income rose 12.44%, and its net fee and commission income jumped 18.9%. Loans and advances grew 4.63%. By the end of March, its non-performing loans had increased 4.2% over the quarter to CNY77.8 billion, but its NPL ratio remained at 0.99%. CCB posted a 15.66% increase in net profit to CNY59.58 billion. Agricultural Bank of China (ABC) said its net earnings rose 8.19% to CNY47.01 billion. Profit growth at slowed significantly from 19% for the whole of last year, as net interest income grew only 4%. Impairment losses on assets increased 17% year-on-year to CNY12.44 billion.

The net profit at BoCom, China’s fifth-biggest bank, grew 11.5% to CNY17.7 billion in the first quarter, compared with 19.6% in the same period of last year. BoCom said its outstanding loans to local government financing vehicles (LGFVs) accounted for 7.97% of all lending at the end of March, 0.52 percentage point lower than the end of last year. Meanwhile, its outstanding loans to the property sector dipped 0.2 percentage point to 5.9% of the total. Minsheng Securities said in its latest outlook that BOC and BoCom will see net profit growth of 3.8% and 7.9% respectively for the whole year. The average profit growth at the 11 listed lenders in China may reach 9% in the first quarter from the same period a year earlier, the brokerage said.

China Minsheng Banking, the nation’s largest privately-owned lender, said net profit surged 20% in the first quarter as strong fee and commission earnings more than offset shrunken profits from making loans. Net earnings totaled CNY11.02 billion in the January-March period, compared with CNY9.17 billion in the same period last year, the bank said in a stock exchange filing. The profit growth, generally in line with market expectations, was made as the bank stayed focused on “non-state-owned companies, small and micro-enterprises, and high-end retail customers”, it said. The first-quarter profit growth marked a significant slowdown from the 34.5% net earnings increase for the whole of last year, as profits were eroded by two interest rate cuts last year and fiercer competition caused by the moves towards interest rate deregulation. The bank’s net interest margin narrowed 0.15 percentage point over the first quarter to 2.45%, the bank said. Net non-interest income surged 44% from a year ago to CNY8.76 billion in the first three months, with its contribution to operating income rising 6.12 percentage points to 30.35%. The NPL ratio remained unchanged at 0.76%.

Industrial Bank Co earned CNY11 billion in the first quarter, a year-on-year rise of 32.4%. Net profit at China Citic Bank rose 7.65% to CNY9.21 billion in the first quarter.

According to the annual report released by the China Banking Regulatory Commission (CBRC), foreign banks achieved profits after taxes of CNY16.3 billion in 2012, down from CNY16.7 billion in 2011. Their asset quality also fell as the ratio of soured loans against total loans rose to 0.52% at the end of last year, from the 0.41% one year earlier, said the report. The total assets of the banks went up 11% year-on-year to CNY2.38 trillion, but their proportion to the total banking assets in China dropped to 1.82%, from 1.93% at the end of 2011. The asset proportion of foreign banks in China has been falling since 2006, when they accounted for 2.11% of total banking assets. “Chinese banks, especially the biggest five state-owned lenders, have dominated the market, and their growth has affected foreign banks’ market shares,” said Jimmy Leung of PricewaterhouseCoopers (PwC) China. The capital adequacy ratio among foreign banks in China rose to 19.74% by the end of 2012, from 18.83% the previous year. Their core capital adequacy ratio (CAR) stood at 19.25%, in contrast with 18.38% at the end of 2011. By the end of last year, banks from 49 countries and regions had set up 42 locally incorporated banks, 95 branches, and 197 representative offices in China. Outstanding loans extended by those banks increased 6.2% to CNY1.04 trillion from one year earlier, while their deposits rose 7.7% to CNY1.43 trillion.

Jilin province is looking to Hong Kong businesspeople to invest in 300 projects, ranging from technology and resources to tourism. In all, CNY235.3 billion is needed, with individual projects ranging in investment scale from CNY30 million to CNY20 billion. Among the 300 projects, 10 require more than CNY5 billion each. A methanol industrial chain project in Jilin city is looking for CNY18 billion, while a polyurethane project in the city needs CNY5.8 billion in investment. “Jilin is accelerating the transformation of its production model and upgrading its industrial structure,” Governor Bayin Chaolu said, adding that a “world-class vehicle production base” is being set up. The province was also promoting the use of new energy, development of modern mechanized agriculture and large-scale water conservation projects. Jilin is also working on the Hunchun International Cooperation Demonstration Area to boost exchanges and cooperation with Russia and North Korea. The demonstration area covers over 90 square kilometers and enjoys preferential policies, ranging from taxes and land-use to financial support and talent pooling.

China will remain the top destination for Japanese investment over the next five years, although Japan’s capital inflow to the country may slow down, according to a survey by the Japan External Trade Organization (JETRO). Of more than 1,000 Japanese companies surveyed, 62.1% chose China as the first place they would invest within the next five years, 10.7 percentage points lower than in 2011. India has been developing into an alternative and is the second most attractive overseas investment destination for Japanese companies, but it is still difficult to estimate whether India will overtake China as the biggest overseas investment destination for Japanese investors, JETRO said. Some large-scale investment projects have been launched by Japanese companies in several Chinese cities in the first three months of the year. Sumitomo Group invested CNY3 billion to jointly expand its real estate business with the Hong Kong Yida Group in Dalian, Liaoning province. Japanese food manufacturer Ajinomoto Group Corp is planning to spend USD13.6 million to expand its production line in Shanghai, while Meiko Trading Co invested USD6 million to establish electronic equipment leasing shops in China. Japanese casual wear designer, manufacturer and retailer Uniqlo is also planning to open more stores in China. Japanese investment in China declined 6.7% year-on-year to USD1.27 billion in the first two months, but its investment in China in March surged 43.2% to USD1.02 billion, according to the Ministry of Commerce (MOFCOM), as reported in the China Daily.

China’s outbound direct investment (ODI) is expected to exceed foreign direct investment (FDI) in the country by 2017, a study by the Economist Intelligence Unit (EIU) says. It predicts that ODI will jump from USD115 billion last year to USD172 billion in 2017, exceeding the amount of foreign funds coming into the country. “Within five years, China’s role in the global economy will completely change, which is to be out, investing overseas,” Robin Bew, Chief Economist of EIU said.  Between 2005 and 2012, outbound investment by Chinese firms grew at an average pace of 35% year-on-year, with China’s global investment ranking climbing from 16th place to third place, after the United States and Japan. By 2017, it would become the world’s second-largest overseas direct investor, behind only the U.S., Bew said. The EIU forecasts that China’s investor focus will shift from seeking natural resources to acquiring market access, technologies and brands. Privately-owned businesses have become increasingly active in chasing overseas investment projects, with the share of state-owned companies (SOEs) falling. In 2005, Chinese ODI flows were reported in just 17 predominantly resource-rich countries, according to data from the Heritage Foundation. By last year, that number had increased to 63.