Chinese bank profit growth slowing as interest rates on loans drop, regulator says
Adds comments from NFRA officials
BEIJING, Aug 21 (Reuters) -Chinese commercial banks' net profit growth is on a downward trend mainly due to a decline in interest rates on loans and narrowing net interest margins, a National Financial Regulatory Administration (NFRA) official said on Wednesday.
The average interest rate on new issued corporate loans in the first seven months this year fell by 39 basis points compared to the same period last year, Liao Yuanyuan, director of the Statistics and Risk Surveillance Department at the banking sector regulator, told a press conference.
China's banking sector is facing growing profitability pressure as lenders are nudged to provide cheap loans to boost a slowing economy, while loan demand remains weak amid a protracted property slump and subdued consumption demand.
The regulator will guide banks to improve management and to cultivate new profit growth points, said Liao.
"Banks and insurance institutions still have sufficient ammunition to offset risks," said Xiao Yuanqi, deputy head of the NFRA.
The regulator also said it would strengthen supervision of major shareholders at small- and medium-sized financial institutions to control their financial risks.
Small and medium-sized financial institutions should focus on their main businesses and not "blindly pursue excessive expansion", said Xiao.
Additionally, the regulator will continue to promote financial institutions to enhance support to the property sector.
Commercial banks have approved 5,392 property projects under the "whitelist" program that aimed at injecting liquidity into the crisis-hit sector, with a financing amount totaling nearly 1.4 trillion yuan ($196.25 billion), said Liao.
The regulator will also encourage local city governments to include qualified property projects into the program as much as possible to meet financing demand of projects that have difficulties in raising money, said Liao.
($1 = 7.1336 Chinese yuan renminbi)
Reporting by Ziyi Tang and Bernard Orr; Editing by Jacqueline Wong and Muralikumar Anantharaman
Latest News
Disclaimer: The XM Group entities provide execution-only service and access to our Online Trading Facility, permitting a person to view and/or use the content available on or via the website, is not intended to change or expand on this, nor does it change or expand on this. Such access and use are always subject to: (i) Terms and Conditions; (ii) Risk Warnings; and (iii) Full Disclaimer. Such content is therefore provided as no more than general information. Particularly, please be aware that the contents of our Online Trading Facility are neither a solicitation, nor an offer to enter any transactions on the financial markets. Trading on any financial market involves a significant level of risk to your capital.
All material published on our Online Trading Facility is intended for educational/informational purposes only, and does not contain – nor should it be considered as containing – financial, investment tax or trading advice and recommendations; or a record of our trading prices; or an offer of, or solicitation for, a transaction in any financial instruments; or unsolicited financial promotions to you.
Any third-party content, as well as content prepared by XM, such as: opinions, news, research, analyses, prices and other information or links to third-party sites contained on this website are provided on an “as-is” basis, as general market commentary, and do not constitute investment advice. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, it would be considered as marketing communication under the relevant laws and regulations. Please ensure that you have read and understood our Notification on Non-Independent Investment. Research and Risk Warning concerning the foregoing information, which can be accessed here.