China’s biggest banks post higher profits amid fresh loan push

Bloomberg

China’s largest lenders posted increases in first-quarter profit and higher interest income as authorities encouraged fresh lending to support the economy.
Industrial & Commercial Bank of China Ltd., Agricultural Bank of China Ltd., Bank of Communications Co. and Bank of China Ltd. reported net income rose as much as 4.9 percent in the three months that ended on March 31. That compares with the average 5.7 percent pace predicted for the nation’s listed banks by China International Capital Corp.
Combined earnings at the five biggest lenders, which together control more than a third of China’s $40 trillion in banking assets, are estimated to grow in 2019 at the fastest pace in five years. Policy makers’ renewed push to spur credit is helping the world’s No. 2 economy rebound, though banks would look to keep a lid on bad loans.
“Banking stocks are likely to deliver both absolute and relative returns in the phase of monetary and credit easing,” CICC analysts led by Victor Wang said in an April 22 note to clients.
ICBC and BoCom loan provisions could offset mild revenue gains, restricting earnings growth to mid-single digits in 2019 CCB may need to raise credit costs later this year BoC earnings may get a short-term boost from robust sector loan growth, yet with full-year profit gains staying in the mid-single digits, says Francis Chan, analyst.
Profit at the big five will probably increase about 6 percent in 2019 after a 4.9 percent gain last year,
according to data compiled by Bloomberg. However, shares of China-listed banks have gained an average 19 percent this year, underperforming the 25 percent increase in the benchmark Shanghai Composite Index.