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Commercial banks’ Q1 net profits go up

By Cong Mu (Global Times)

08:20, May 18, 2012

Net profits of Chinese commercial banks increased by 23.7 percent year-on-year to 326 billion yuan ($51.6 billion) in the first quarter, according to the banking industry watchdog yesterday.

New loan growth has dropped due to a slowdown in economic activity, but banks' net interest margin increased to 2.8 percent in the first quarter in 2012 from 2.6 percent in the same period last year, statistics released by the China Banking Regulatory Commission (CBRC) showed.

"Although the volume of new loans is declining, (lending) interest rates are staying at a high level. As a result, (banks') interest incomes would continue to grow," Wen Chunling, a banking industry analyst at Fitch Ratings China, told the Global Times yesterday.

Meanwhile, the banks have been charging customers a variety of fees, such as capital management fees, consulting fees and quota management fees, for issuing loans to them. The non-interest incomes are also a major source contributing to banks' profits, but part of such charges may not be sustainable, as the CBRC has been investigating such irregular practices at the banks, Wen said.

Non-interest incomes constituted 20.6 percent of the banks operating incomes in the first quarter of 2012, compared with 20.8 percent in the same period last year, according to the CBRC.

Social financing, a comprehensive measure of total fundraising, including new bank loans, stood at 3.9 trillion yuan in the first quarter of 2012, down by 7.4 percent year-on-year, according to the central bank.

Lu Ting, China Economist at Bank of America-Merrill Lynch, yesterday cut his China annual GDP growth forecast to 8 percent from 8.5 percent for 2013.


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