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Banks given positive outlook

By Oswald Chan (China Daily)

08:31, February 07, 2013

An Industrial and Commercial Bank of China Ltd branch in Shanghai. CCB International Securities Ltd said in a report on Tuesday that mainland banks' net interest margin may decrease in the first quarter of this year, squeezing lenders' net profits. [Photo/China Daily]

Report says sector to gain boost from flurry of solid economic data

Investment bank CCB International Securities Ltd remains upbeat on the domestic banking sector this year, amid a flurry of bullish data and research reports on the Chinese economy.

The research unit under the investment bank said in a report released on Tuesday that it believes that the country's financial regulatory bodies will be accommodative in the implementation of new policies and that the domestic economic growth will be sustained.

In its 2013 China Banking Outlook report, CCB International said that domestic banks have a substantially reduced likelihood of being affected by further regulatory-policy risks and concerns of a sharp domestic economic slowdown.

Regarding regulatory risks, the bank said that, while it expects the China Banking Regulatory Commission to keep a close eye on potential risk factors in the banking system, the regulator will also be more accommodative in terms of new policy implementation.

The report said that the domestic economy should grow 8 percent in 2013, which should lend support to the profit growth of domestic banks.

The People's Bank of China, the country's central bank, cut interest rates twice in 2012 to boost the domestic economy.

In further positive news, on Tuesday, the HSBC China Services Purchasing Managers' Index, or PMI - an index used to gauge the expansion of the domestic services industry - rose to 54 in January from 51.7 in December, the fastest growth rate in four months. A reading above 50 indicates expansion.

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