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China’s banks pull in claws: 2011 CCB results

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China Construction Bank reported Monday, biting the bad news on the full year reporting even as China’s largest firms reported a large downtick in profit from the first two months of 2012 to 606 bln Yuan or barely $100 bln while February 2011 alone reported CnY 5.45 Tln Yuan in profits in 2011. State Firms profits were down 20%  led by Ferrous reporting a drop of 94% and Power and Oil& Gas sector companies reporting gains of 21% and 15.5%. Private firms grew profits by 24% while state banks struggled with the impact of adding back the almost 10% of LGFV / LSF loans on to their Balance sheet and despite additional Capital infusion by Huijin and better capital ratios for 2011 , have not been lending near enough even to the low 2012 targets, credit being a miss in Q1 from the low 2 Tln Yuan target

Yuan dynasty banknote with its printing plate ...

Yuan dynasty banknote with its printing plate 1287. An upper line reads: 「至元通行寳鈔」 zhì yuán tōng háng bǎo chāo (Pinyin). A left line (Phagspa script) reads: jˇi ’ŭen baw č‘aw : to say 「至元寳鈔」 (Photo credit: Wikipedia)

CCB’s nine months had kept most of the profit jumps in 2011, the full year results still amounting to a 26% jump over 2011 to $26.89 bln or 169 bln Yuan. NII was up 21% to 53 bln Yuan for the year and CAR crept up to 13.68% . Th eLoan assets of $1 Tlna re on a base of CnY10 Tln in Deposits or $1.33 Tln. Property loans book was static at $32 bln and Personal mortgages CnY1.32 Tln while Corporate loans grew 11% at a fast pace , personal mortgages growing 20%

BofA sold another 4% stake in the bank in the month of November which was picked up by Temasek and Hujin, whose stake in the bank now exceeds 60%. NII for the full year was a high CnY 304 bln and Fee income rose 30% to CnY 87 bln. CCB loan books are higher than AgBank at CnY 6.6 tln with CnY 827 bln in loans in 2011. Targets for 2012 are for a 10% increase in Profit. As in Europe, banks are trying to expand SME lending as to Farms and Farmers thru the 3F initiative

The 2010 figures for NII and Fee income were a low Cny 251 bln and CnY66 bln

The Balance Sheet grew to CnY12.28 Tln Yuan and Liabilities CnY 11.78 Tln. The PBOC released 400 bln Yuan in February from  RRR cuts to maintain liquidity. Only 43% of MNC firms expect revenues to rise more than 10% in 2012 across industries even as soaring production costs and wage inflation hit manufacturing production while Services continue to grow along with Global Trade esp as Yuan becomes a tour de force for trade settlements and China the no. 1 trading partner in many dominions

CCB suggests sub standard loans spiked 27% in H2 and the last quarter also saw a 10% rise in NPLs. Fee income was 18 bln Yuan or $3 bln in Q4 from nearly 20 bln Yuan last year. Even though state banks with CCB at #3 behind AgBank and ICBC, are willing to lend more to property developers preferably more so in affordable/entry level housing, property regulations are likely to continue with a new property tax being piloted in many states. According to the leaks filtered from the banks reporting and Central bank directions as assessed by analysts CCB is one of three banks reducing Dividend payouts and has a larger Huijin investment than AgBank. Its Dividend payout is going to be cut from 39% in 2010 to 34% in 2011

CCB is valued at nearly $200 bln in the exchanges before the prices fell in February along with BOC, ICBC and even AgBank

Foreign banks hold 2.3% of the bank credit share in China at $159 bln according to the CBRC. The NDRC recently informed foreign banks of new debt quotas in 2012 amounting to even double the 2011 quota in some cases and double digit increases in most.  mean while Chines 4Big 4 made the Top 20 in Brand Finance Top 500 bank brands with CCB at #10 , the top of the Chinese elite in brand valuation/recall

CCB impairment losses were a 10 bln Yuan behind AgBank yet rose 22% to 36 bln Yuan in 2011 and NPLs were 1.09% compared to 1.55% at AgBank. ICBC and BOC report later this week, NPL Balance at CnY 70 bln

Banks like BoCom that make up the Pvt sector leaaders in the Top 20 are out to raaise large Capital for the consumption rush in the consumer economy and the big 4 back in the property lending market, while both try to use Hongkong and their Global locations to increase share in China’s trade pie with or without Yuan

The bank’ s Provision coverage ratio has reached a big 241% while both AgBank and CCB have CnY 400 bln each in LGFV loans outstanding / extended/rolled over (restructuring) in 2011. New redit for CCB is a low CnY 150 bln in Jan and Feb while Q1 seems to be headed to a 20% lower than the CnY2 Tln target revised by CBRC/PBOC.

 

 

 

 

 

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This entry was posted on March 27, 2012 by in Amitonomics, Banking, China, Financial Services, Global.

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