Agricultural Bank of China reported slim distinction enlargement for a initial half of a year as it continues to face a severe handling environment.
“The non behaving loan ratio is on a rise, and there is no fit direct for loans. We should tie a belts,” pronounced Zhou Mubing, a bank’s authority of a board.
Agricultural Bank announced currently in Beijing that a net distinction rose by 0.5 per cent in a initial half of this year, violence a 1.1 per cent decrease likely by 3 analysts polled by a South China Morning Post.
The bank reported net distinction of 105.1 billion yuan for a initial half of 2016, only adult from 104.5 billion yuan for a same duration final year.
Its reported non behaving loan ratio stood during 2.4 per cent as of a finish of June, good above a Chinese banking attention normal 1.78 per cent, yet an boost of only 0.01 of a elect indicate given a finish of final year.
“Our NPL turn remained broadly fast in a initial half,” pronounced Zhao Huan, a bank’s president. “There were some new NPLs yet we also stepped adult a efforts to redeem or send NPLs and we likely of over 60 billion yuan value of NPLs this year.”
Mainland banks are compulsory to set aside a poignant volume of collateral to catch intensity loses from bad debts, impacting on profits, yet critical for stability.
As of a finish of June, Agricultural Bank’s NPL coverage ratio had forsaken to 177 per cent, above a regulatory requirement of 150 per cent and aloft than many of a competitors, yet still down from 189 per cent on Dec 31 final year.
Net seductiveness income forsaken by 9 per cent in a initial 6 months on an annual basement to mount during 199 billion yuan, yet cost and elect income rose by 7 per cent year-on-year to only over 51 billion yuan.
“The normal purpose of banks in holding deposits and arising loans is no longer sufficient. We need to enhance a business and offer some-more services,” pronounced Zhou, citing private banking among several intensity areas for expansion.
Another discouraging pointer for a bank was a decrease in a net seductiveness domain to 2.31 per cent for a initial half of this year down from 2.78 per cent in a same duration final year.
Interest income from corporate loans decreased by 18 per cent, while seductiveness income from sell loans declined by 9 per cent. The bank pronounced that this was essentially a outcome of seductiveness rate cuts by a People’s Bank of China, and taxation changes.
Agricultural Bank of China is a third of China’s large 5 banks to announce a results. Yesterday, China Construction Bank announced a arise in increase of 1 per cent for a initial half and Bank of Communications announced a arise in increase of 0.9 per cent. Bank of China, and Industrial and Commercial Bank of China will announce their halt formula on Tuesday.
Agricultural Bank’s share cost stood during HK$3.13 a share during tighten of trade on Friday, down 1.26 per cent year-to-date.
Article source: http://www.scmp.com/business/banking-finance/article/2009536/we-should-tighten-our-belts-says-agbank-board-chair