ICBC’s quarterly profit surges 75.7bn yuan

Bloomberg

Industrial & Commercial Bank of China Ltd., (ICBC) the world’s largest lender by assets, reported its strongest quarterly profit growth in two years as soured credit and lending margins stabilized amid an uptick in the economy.
Net income rose 1.4 percent to 75.79 billion yuan ($11 billion) in the three months ended March 31 from 74.76 billion yuan a year earlier, the Beijing-based lender said in an exchange filing. Rival lender Agricultural Bank of China Ltd. separately reported a 1.9 percent profit increase for the period.
The profit outlook for China’s biggest lenders, which have been struggling with rising defaults and narrower margins, has improved after the country’s economic growth accelerated for two straight quarters. Challenges remain as the government embarks on a campaign to curb leverage in the economy and tightens regulations on mortgage lending and
off-balance sheet wealth-management products.
Usually, the first-quarter result season “has little impact on China banks’ share price, but 2017 may prove different,” Jefferies analysts led by Victor Wang wrote in an April 17 note. “We may see vast divergence among banks” from the first quarter onward as the regulatory changes start to take effect, they said.
In a sign that Chinese companies’ ability to repay debt has picked up, the average NPL ratio among the country’s banks dropped to 1.74 percent at the end of March from a seven-year high of 1.76 percent in September, data from the industry regulator show.
ICBC’s nonperforming-loan ratio fell to 1.59 percent as of March 31 from 1.62 percent three months earlier. The bank’s bad-loan coverage ratio improved to 141.5 percent from 136.7 percent at the end of last year, below the regulatory minimum of 150 percent.
The lender reported a net interest margin of 2.12 percent, which was higher than the fourth quarter’s 2.1 percent, according to Sanford C. Bernstein estimates.