Profit growth at Chinese banks slowing
March 30, 2015 Category Finance, Weekly
Profit growth slowed for the Chinese banking sector last year while bad loans continued to rise amid pressure from an economic downturn. The Agricultural Bank of China (ABC) said that its year-on-year growth in net profit was just 8% in 2014, compared with 14.5% in 2013. The lender’s non-performing loan (NPL) ratio rose by 32 basis points to 1.54% at the end of last year, above the national average of 1.25% for commercial banks. China Merchants Bank reported that its net profit attributable to the bank’s shareholders increased 8.06% from a year earlier in 2014, compared with 14.3% in 2013, the slowest growth for the lender since 2009. China CITIC Bank also announced a fall in net profit growth year-on-year, from 26.24% in 2013 to 3.87% in 2014. Analysts said the slowdown in profit growth for these banks is mainly because they set aside a much larger amount of provision for potential losses, which greatly increased their credit costs.
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