Ping An Bank ramps up loans to corporate clients

Bloomberg

Ping An Bank Co., the lending arm of China’s largest insurer, kicked off the earnings season for Chinese banks with better-than-estimated profit growth after ramping up loans to corporates even as the virus outbreak grounded the economy and led to a surge in personal defaults.
Net income rose 14.8% to 8.5 billion yuan ($1.2 billion) in the first quarter, the Shenzhen-based lender said in an exchange filing. That was the fastest growth in the first three months of the year since 2015, beating estimates of about 12% to 13%, according to analysts at Zheshang Securities Co.
The result could ease concerns among investors that Chinese banks are poised to post an unprecedented drop in profits this year as they grapple with the fallout of the coronavirus. Lenders in the world’s most populous nation face additional credit costs of almost 1.6 trillion yuan, S&P Global forecast earlier this month, warning the sharp increase would pressure their profitability and capital strength.
At least for Ping An Bank, the impact has so far been manageable. While its outstanding provisions for bad debt rose 15% in the first quarter, it managed to keep its ratio of non-performing loans unchanged at 1.65%. The bank’s loan portfolio to retail customers, especially its credit card business, took a heavy hit, with the default ratio rising to 1.52% from 1.19% in December.
The bank said it enacted emergency measures in January and expects the risk in its retail banking book to normalize. But analysts warned the worst may be yet to come.
“There will be some lag to see the full virus impact,” said Wang Jian, an analyst at Guosen Securities Co. “For Chinese banks, the uncertainties will unfold starting from the second quarter.”