China Construction Bank Corp. (939), the nation’s second-largest lender by market value, reported wider lending margins in the first quarter, helping it to post its biggest profit increase in a year.
Net income rose 10 percent to 65.8 billion yuan ($10.5 billion) for the three months through March from 59.6 billion yuan a year earlier, the Beijing-based lender said in a filing to Shanghai’s stock exchange yesterday.
That compares with the 65.2 billion-yuan median estimate of eight analysts compiled by Bloomberg News.
The biggest growth in Construction Bank’s profit since the first quarter of 2013 may check concerns it will be hobbled by rising defaults amid a slowdown in an economy that had its first onshore bond default earlier this year.
Shares of China’s four largest lenders are trading near record-low valuations. The results “should reassure the bulls, and are better than the bears would have liked,” Sandy Mehta, chief executive officer of Value Investment Principals Ltd. in Hong Kong, wrote in an e-mail yesterday.
“The sector’s valuations remain attractive on several key metrics with high dividend yields and low earnings and book-value multiples.”
Shares of Construction Bank declined 9.2 percent this year in Hong Kong, compared with the benchmark Hang Seng Index’s 4.7 percent drop.
The lender was valued at 4.7 times estimated profit, less than half the Hang Seng’s multiple of 10.3.
AgriBank Profit
Construction Bank was the third of the four big lenders to report earnings in the past week.
First-quarter profit grew 14 percent at both Agricultural Bank of China Ltd. (1288) and Bank of China Ltd. Industrial & Commercial Bank of China Ltd., the largest of the four, is due to post results on April 29. Agricultural Bank reported January-March net income of 53.4 billion yuan ($8.5 billion) after markets closed on April 25.
The total compares with 47 billion yuan a year earlier and the 52.4 billion-yuan median of eight analysts’ estimates compiled by Bloomberg.
Construction Bank’s net interest margin, a gauge of lending profitability, expanded to 2.81 percent at the end of March, from 2.74 percent at the end of December, according to the statement. The lender had outstanding loans of 8.68 trillion yuan as of March, 4 percent higher than at the end of last year.
Construction Bank’s soured loans rose 6.4 percent to 90.8 billion yuan as of March from the end of 2013, raising bad loans as a percentage of total lending to 1.02 percent from 0.99 percent, the company said.
Soured Debt
Banks’ bad loans increased for a ninth straight quarter as of December to the highest level since 2008, data from the China Banking Regulatory Commission show.
New nonperforming loans amounted to more than 60 billion yuan in the first two months of this year, compared with 100 billion yuan for all of 2013, China Business News reported on April 9.
Construction Bank appointed Xu Yiming as chief financial officer, the lender said in a separate statement yesterday. Xu who has been general manager of the bank’s assets and liabilities management department since 2005.
The appointment still needs CBRC approval, according to the statement. The lender acted as a policy bank for 40 years since its founding in 1954, disbursing government funds for infrastructure developments until China Development Bank Corp. was set up in 1994.
Chinese banks, seeking to diversify beyond traditional lending, are facing greater risks as they venture into new businesses such as wealth-management products, trusts, interbank lending, and lend more to small and mid-sized enterprises.
Investor Protest
Construction Bank and ICBC have stopped distributing trust products as risks of default increase, the Securities Daily reported March 21, citing unidentified bank employees.
At least 30 Chinese investors in a troubled high-yield product protested on April 16 outside a Construction Bank branch in Shanxi province, demanding their money back.
The lender is the custodian for the Songhuajiang River No. 77 trust, which missed six payments as of last month. Compounding concerns over banks’ earnings are worries over lending to property developers following Zhejiang Xingrun Real Estate Co.’s collapse last month.
That came after Shanghai Chaori Solar Energy Science & Technology Co. (002506) became the country’s first company to default on onshore bonds when it failed to make a full coupon payment on March 7.
bloomberg.com
Net income rose 10 percent to 65.8 billion yuan ($10.5 billion) for the three months through March from 59.6 billion yuan a year earlier, the Beijing-based lender said in a filing to Shanghai’s stock exchange yesterday.
That compares with the 65.2 billion-yuan median estimate of eight analysts compiled by Bloomberg News.
The biggest growth in Construction Bank’s profit since the first quarter of 2013 may check concerns it will be hobbled by rising defaults amid a slowdown in an economy that had its first onshore bond default earlier this year.
Shares of China’s four largest lenders are trading near record-low valuations. The results “should reassure the bulls, and are better than the bears would have liked,” Sandy Mehta, chief executive officer of Value Investment Principals Ltd. in Hong Kong, wrote in an e-mail yesterday.
“The sector’s valuations remain attractive on several key metrics with high dividend yields and low earnings and book-value multiples.”
Shares of Construction Bank declined 9.2 percent this year in Hong Kong, compared with the benchmark Hang Seng Index’s 4.7 percent drop.
The lender was valued at 4.7 times estimated profit, less than half the Hang Seng’s multiple of 10.3.
AgriBank Profit
Construction Bank was the third of the four big lenders to report earnings in the past week.
First-quarter profit grew 14 percent at both Agricultural Bank of China Ltd. (1288) and Bank of China Ltd. Industrial & Commercial Bank of China Ltd., the largest of the four, is due to post results on April 29. Agricultural Bank reported January-March net income of 53.4 billion yuan ($8.5 billion) after markets closed on April 25.
The total compares with 47 billion yuan a year earlier and the 52.4 billion-yuan median of eight analysts’ estimates compiled by Bloomberg.
Construction Bank’s net interest margin, a gauge of lending profitability, expanded to 2.81 percent at the end of March, from 2.74 percent at the end of December, according to the statement. The lender had outstanding loans of 8.68 trillion yuan as of March, 4 percent higher than at the end of last year.
Construction Bank’s soured loans rose 6.4 percent to 90.8 billion yuan as of March from the end of 2013, raising bad loans as a percentage of total lending to 1.02 percent from 0.99 percent, the company said.
Soured Debt
Banks’ bad loans increased for a ninth straight quarter as of December to the highest level since 2008, data from the China Banking Regulatory Commission show.
New nonperforming loans amounted to more than 60 billion yuan in the first two months of this year, compared with 100 billion yuan for all of 2013, China Business News reported on April 9.
Construction Bank appointed Xu Yiming as chief financial officer, the lender said in a separate statement yesterday. Xu who has been general manager of the bank’s assets and liabilities management department since 2005.
The appointment still needs CBRC approval, according to the statement. The lender acted as a policy bank for 40 years since its founding in 1954, disbursing government funds for infrastructure developments until China Development Bank Corp. was set up in 1994.
Chinese banks, seeking to diversify beyond traditional lending, are facing greater risks as they venture into new businesses such as wealth-management products, trusts, interbank lending, and lend more to small and mid-sized enterprises.
Investor Protest
Construction Bank and ICBC have stopped distributing trust products as risks of default increase, the Securities Daily reported March 21, citing unidentified bank employees.
At least 30 Chinese investors in a troubled high-yield product protested on April 16 outside a Construction Bank branch in Shanxi province, demanding their money back.
The lender is the custodian for the Songhuajiang River No. 77 trust, which missed six payments as of last month. Compounding concerns over banks’ earnings are worries over lending to property developers following Zhejiang Xingrun Real Estate Co.’s collapse last month.
That came after Shanghai Chaori Solar Energy Science & Technology Co. (002506) became the country’s first company to default on onshore bonds when it failed to make a full coupon payment on March 7.
bloomberg.com
1 comment:
Oh know ! Anyway thanks for sharing this informative post.It's really a nice place to know about such happenings in the market.Keep sharing it which I refer to my friends trading with Greenvault FX also.
Post a Comment