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Minsheng's profit surges 70% in 1st half
By Chuan Yu (China Daily)
Updated: 2004-08-24 08:56
The China Minsheng Banking Corporation posted an almost 70 per cent rise in
net profit yesterday for the first half of this year, thanks to stable business
growth and despite the State's credit curbs aiming to cool down economic growth.
The private lender also projected a 50 per cent increase in net profit for
the first three quarters of this year as "the number of outlets increases and
marketing efforts are stepped up further."
The bank's net profit for the first six months of this year came in at 1.09
billion yuan (US$131 million), up 68.39 per cent on a year-on-year basis, it
said in the first-quarter report released yesterday. It did not give a
break-down of quarterly numbers.
Operating income rose by 67.66 per cent to 8.2 billion yuan (US$988 million),
while costs jumped by 65.75 per cent to 6.3 billion yuan (US$759 million), it
said.
The bank's robust profit growth defies analysts' expectations that the pace
may slow down this year as the government tries to cool down expansive credit
growth that is believed to have fuelled excessive fixed investment in sectors
like steel and cement.
Frenzied fixed investment and bank loan growth in some sectors starting in
the latter half of last year has prompted the State to take a string of
tightening measures, including requiring banks to set aside more reserves to
restrict their lending capacities and tight land controls.
The growth in fixed investment and bank lending slowed down significantly in
the past three months, boosting confidence that the State's measures are working
and reducing the possibility of further tightening measures that some fear would
lead to an abrupt economic slowdown.
The Minsheng Bank said its loans increased by 24 per cent on a year-on-year
basis in the first half of this year to 249.6 billion (US$30 billion), while
deposits rose by 23 per cent to 337 billion yuan (US$40.6 billion).
The 0.5 percentage point increase in bank reserve requirements, which the
central bank announced in April to curb credited growth, "had a certain effect
on our asset operations, but did not have any significant effect on operating
profit," the bank said.
But the interest rate fluctuations in the money market, which largely
resulted from the State's macro management measures, had forced the bank to
readjust asset operations, and led to a slowdown in interbank business income
and investment yields, it said.
The bank's ratio of non-performing loans stood at 1.28 per cent of total
lending at the end of June, down from 1.29 per cent at end-2003.
The ratio was the best among all Chinese banks, which had an average of 15
per cent of total lending.
Among its measures to reduce bad loans, the bank said it adjusted lending
strategies in accordance with the State's macro management policies, improved
its risk management mechanisms and promoted the stricter
internationally-accepted five-category loan classification system.
Some Chinese banks, especially joint-stock lenders, continued to lend
aggressively this year despite warnings from regulators about risks, analysts
say. There has also been criticism that they have been restricting new loans
excessively in recent months after the authorities stepped up regulatory
efforts.
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