China’s Listed Banks Post Higher 2010 Net Profit on Larger Loan Books

April 29, China’s 16 listed banks have posted combined net profit of RMB 677.4 billion for 2010, up 33.5% year-on-year, mainly due to the continuous expansion of loan business, according to Wind Co., a leading financial data and software provider in China.

Bank of Nanjing Co. Ltd. (601009.SH) recorded the fastest loan growth, up 25%, followed by Bank of Ningbo Co. Ltd. (002142.SZ), Huaxia Bank Co. Ltd. (600015.SH) and Shanghai Pudong Development Bank Co. Ltd. (SPD Bank, 600000.SH) with growth of 24%, 23% and 23%, respectively.

China Everbright Bank Co. Ltd. (601818.SH), which listed on the domestic market in August, posted the largest y-o-y growth in net profit for last year.

SPD Bank recorded the fastest growth (83%) in fees and commissions among listed banks for last year, followed by China Minsheng Banking Corp. Ltd. (1988.HK, 600016.SH) with 78%. The rapid growth was mainly contributed by financial advisory and consultancy income, the official Securities Times reported on Friday.

In addition to the rapid expansion of loans, a rebound in interest spreads also helped boost banks’ profits.

According to Wind Co., Huaxia Bank recorded the biggest leap in interest spreads for 2010 among listed banks, an increase of 0.43 percentage points from 2009; China Merchants Bank Co. Ltd. (CMB, 3968.HK, 600036.SH) witnessed a jump of 0.42 percentage points.

Bank of Beijing Co. Ltd. (601169.SH), Bank of Ningbo, Bank of Nanjing and China Construction Bank Corp. (0939.HK, 601939.SH) all saw their interest spreads fall.

After a lending binge in the recent few years, banks have lowered their loan growth targets for 2011.

SPD Bank cut its target to 13.5% from last year’s 22%, while Industrial Bank Co. Ltd. (601166.SH) also lowered its loan growth target to 16.5% for 2011 from 22% in 2010.

Banks are busy raising funds through bond sales to replenish capital in the face of higher reserve requirements.

So far, seven banks have announced plans to raise a combined RMB 447.6 billion via financial bonds on domestic markets and renminbi-denominated bonds in Hong Kong.

Those banks are: Bank of Communications Co. Ltd. (3328.HK, 601328.SH), Minsheng Banking, Industrial Bank, CMB, Bank of China Ltd. (3988.HK, 601988.SH), Huaxia Bank and Bank of Beijing, according to data compiled by the 21st Century Business Herald.

edited by Cyrus LAO