| An employee works on an air conditioner production line at a Midea factory in Wuhan in China's central Hubei province in this March 25 file photo. AFP |
But bank officials and analysts expect their asset quality to worsen this year as the coronavirus strains the financial health of their borrowers.
Major Chinese lenders started reporting their full-year results Friday. Ahead of the results, Fitch Ratings said in a press release Thursday that it expects Chinese banks' asset quality to weaken, with the extent of the deterioration contingent on the duration of the economic disruptions caused by the pandemic. Globally, Covid-19 has spread from the epicenter of Wuhan, Hubei Province, to over 200 countries, claiming more than 24,000 lives.
"Our revised GDP forecasts imply some immediate hit to banks' asset quality, with the non-performing loan (NPL) ratio for our rated banks potentially rising to around 3.5 per cent from 1.5 per cent at the end of June 2019," said analysts including Vivian Xue, a director, and Elaine Xu, an associate director, at Fitch Ratings. China's banking sector-wide NPL ratio was 1.86 percent at the end of last year.
Fitch Rating earlier this month cut its 2020 GDP growth forecast for China to 2.2 percent, from 5.9 percent before the coronavirus outbreak. China's 2019 full year GDP grew 6.1 percent, the slowest in 29 years.
Bank of Communications' NPL ratio stayed flat in 2019, at 1.47 percent, versus 1.49 percent a year earlier. Its net profit attributable to shareholders rose 4.96 percent to 77.28 billion yuan, from 73.63 billion yuan a year ago.
Senior management at the bank admitted there was a chance its NPL ratio would "rebound" this year, as the impact of the coronavirus began to show, even among some of its lower-risk borrowers.
"Our NPL might rebound this year, but this will affect all Chinese commercial banks alike. Even among some of our high quality clients, they might also face financial difficulties. [This implies that] we have to accelerate our debt collection and recovery business," said Ren Deqi, chairman and executive director, on a results conference call.
China's sixth largest bank by assets said net interest income rose 10 percent to 144.08 billion yuan, from 130.91 billion yuan. Its net interest margin, a key gauge of a bank's profitability, was stable, edging up slightly to 1.58 percent from 1.51 percent.
Industrial and Commercial Bank of China (ICBC) reported that net profit attributable to shareholders rose 4.9 percent to 312.22 billion yuan for 2019, from 297.68 billion yuan a year ago, beating analysts' estimates of 310 billion yuan calculated by Reuters.
The world's biggest listed lender by assets reported that net interest income rose 6 per cent to 606.93 billion yuan from 572.52 billion yuan. Its net interest margin dropped slightly to 2.24 percent from 2.3 percent.
"While the domestic economy has remained generally stable, it is facing mounting downward pressure, especially with the heavy blow from the sudden Covid-19 outbreak," the bank said in its results announcement filed to the Hong Kong stock exchange.
ICBC's non-performing loan ratio declined to 1.43 percent from 1.52 percent.
Bank of China's net profit attributable to shareholders rose 4.1 percent to 187.41 billion yuan from 180.09 billion yuan a year ago, beating analysts expectation at 182.19 billion yuan calculated by Reuters. Net interest income rose 4 per cent to 374.25 billion yuan from 359.71 billion yuan.
China's fourth largest lender by assets saw its net interest margin drop to 1.84 percent from 1.9 percent a year ago, while its NPL ratio fell slightly, declining to 1.37 percent from 1.42 per cent.