The report is more on ICBC, so I post it here...
(not vested)
China’s big four banks’ profits surprise as reforms gather pace
HONG KONG – Industrial and Commercial Bank of China (ICBC) beat estimates with a near 7 per cent rise in first-quarter net profit, the fourth of China’s biggest lenders to show more resilient profits than expected as interest income held firm.
ICBC said net profit rose to 73.3 billion yuan (S$14.7 billion) in the first quarter, compared with an average estimate of 71.52 billion yuan calculated from a Thomson Reuters poll of 11 analysts.
Interest margins are expected to fall in the long run for Chinese banks, as the country’s regulators liberalise interest rates that guarantee a fat spread between the rate banks pay depositors and the rate at which they lend.
China’s central bank said on Tuesday it will speed up interest rate reforms and reiterated the urgency of establishing a deposit insurance system.
Further short-term pressure on interest margins comes from competition for depositors’ money from wealth management products and online funds, which are pushing savers into deposit products that are costlier for banks to provide.
“Internet finance is forcing commercial banks to reform. They need to develop a stronger online mentality, bring net technology into their operations and carry out further business model innovation,” said Mr Raymond Yung, financial services leader at PwC China in a statement ahead of the earnings season.
ICBC is the last of China’s top four banks to report earnings for the first quarter. Last week, Agricultural Bank of China, Bank of China and China Construction Bank all reported better-than-expected results as net interest margins held up in the face of rate reforms.
In the first quarter, banks resisted pressures on interest margins better than the market had expected, analysts said in research notes published after the earnings, by boosting returns from loans amid tight credit conditions in China.
Shares of the big four banks have fallen an average of 3 per cent in Hong Kong in the last five days, despite the better than expected results, suggesting investors are more focused on longer-term concerns about asset quality and interest margins. REUTERS
http://www.todayonline.com/business/chin...ather-pace