May 3, Listed Chinese city banks expanded their loan books in 2010 at half the pace in 2009 mainly due to rigorous macroeconomic control policies imposed by the central government last year, China Business News reported on Monday.
As of the end of last year, China’s three listed city lenders – Bank of Ningbo Co. Ltd. (002142.SZ), Bank of Beijing Co. Ltd. (601169.SH) and Bank of Nanjing Co. Ltd. (601009.SH) – had outstanding loan balances of RMB 101.57 billion, RMB 334.73 billion and RMB 83.89 billion, respectively, up 24.08%, 22.4% and 25.16% from a year earlier, the paper said.
Those growth rates were down from 66.54%, 41.65% and 66.82%, respectively, in 2009, the report said.
Their interest spreads also fell last year, the paper said.
Bank of Ningbo saw its interest spread decrease 36 basis points (bps) to 2.758% in 2010; Bank of Beijing and Bank of Nanjing saw theirs fall three bps and 24 bps, respectively, to 2.33% and 2.55% in 2010.
Despite a slowdown in loan book expansion and narrower interest spreads, the banks reported rapid increases in net profit mainly due to greater net interest income, intermediary business and business restructuring, the paper said.
Bank of Ningbo reported year-on-year net profit growth of 59.32% in 2010. It posted net profit of RMB 815 million for the first quarter this year, an increase of 63.63% from a year earlier.
Bank of Ningbo reported net interest income of RMB 5.115 billion for 2010, up 43.9% from a year earlier.
Bank of Beijing and Bank of Nanjing recorded net profit growth of 20.75% and 49.7% in 2010. The banks also reported RMB 2.52 billion and RMB 790 million, respectively, in net profit for the first quarter, up 20.45% and 34.2% y-o-y.
Bank of Beijing and Bank of Nanjing reported net interest income of RMB 14.48 billion and RMB 4.622 billion, respectively, for 2010, up 32.18% and 45.94% y-o-y.
According to the banks’ 2010 annual reports, Bank of Ningbo, Bank of Beijing and Bank of Nanjing realized fees and commission income of RMB 597 million, RMB 964 million and RMB 475 million, respectively, up 14.59%, 48.2% and 44.63% y-o-y, the report said.
In addition, the banks have shifted their business focus to offering loans to individuals and small and medium-sized enterprises, which is believed to have been a big contributing factor to their results, the paper said.
Listed city lenders have sufficiently fulfilled the mandated capital requirements imposed by the banking regulator even after a lending spree in the past two years, raising funds through private placements and bond sales.
At the end of 2010, Bank of Ningbo had a capital adequacy ratio (CAR) of 16.2% and core CAR of 12.5%; Bank of Beijing had CAR and core CAR of 12.62% and 10.51%, while Bank of Nanjing saw its ratios at 14.63% and 13.75% for the same period.
Bank of Beijing announced last week that it would conduct a private placement to raise up to RMB 11.8 billion, which, according to a research report by Northeast Securities, will further boost the bank’s CAR and core CAR to 15.63% and 13.5%, respectively.
edited by Cyrus LAO