* Two of China’s Big Five see profits increase by more than 60% in Q4
* Margins per inch
* AgBank chairman says pressure persists (adds details)
BEIJING / SHANGHAI, March 30 (Reuters) – Two of China’s largest lenders each reported a more than 60% increase in their net profit for the fourth quarter of 2020, as margins gradually widened.
This follows results from three of the country’s other largest banks – along with the Big Five – which also saw stable earnings growth and net interest margins, a key indicator of profitability.
Bank of China (BoC), the country’s fourth-largest bank by assets, reported a 69.5% increase in net profit for the fourth quarter of 2020, while Agricultural Bank of China Ltd (AgBank) reported an increase of 61% over the same period.
In the first three quarters of 2020, Chinese lenders took heavy loan loss provisions as Beijing urged the industry to step up lending to sectors affected by the pandemic, but many began to take a profit turn as Beijing urged the industry to step up lending to pandemic-hit sectors. tandem with an economic recovery and should continue to do so throughout the year.
Analysts expect the NIM to move positively for the big banks this year due to the central bank’s gradual return to neutral monetary policy.
For the BoC, the most international of China’s major state-owned banks in terms of global franchise, NIM improved slightly to 1.85% from 1.81% three months earlier.
AgBank followed suit with an NIM of 2.2% at the end of December against 2.14% at the end of June. The lender does not release the NIM on a quarterly basis.
However, despite optimistic forecasts, margins are still under pressure for some this year.
“The bank still faces some pressure on NIM in 2021, in the first quarter of 2021, mortgage revaluations lowered NIM by 2-3 basis points,” AgBank Chairman Zhang Qingsong said on Tuesday, during a call for results. .
At the same time, the ratios of non-performing loans also remained roughly stable for the two lenders.
At the BoC, the NPL ratio fell slightly to 1.46% at the end of December against 1.48% at the end of September. AgBank’s NPL ratio increased slightly to 1.57% from 1.52% over the same period.
But Chen Huaiyu, party committee member and vice chairman of the BoC, warned that “the marginal tightening of monetary policy, the end of SME support measures and the delayed impact of the pandemic” will always exert pressure. on assets.
$ 1 = 6.5627 yuan Chinese renminbi Report by Cheng Leng in Beijing, Zhang Yan and Engen Tham in Shanghai; edited by Louise Heavens