Chinese banks see slight profit rises as economy slows

Two of China's biggest banks on Wednesday announced slight increases in 2015 net profits, but warned of growing risks from bad loans as the world's second largest economy slows. The Industrial and Commercial Bank of China (ICBC) eked out a 0.48 percent rise in net profit to 277.13 billion yuan ($43 billion), it said in a statement to the Hong Kong stock exchange where it is listed.
Its net profit figure still exceeded the 275.2 billion yuan average forecast of analysts surveyed by Bloomberg News. "In 2015, financial risks emerged in multiple fields and threatened to spread under the pressure of downward trends in the economy, declining corporate profits and tumbling capital markets," said ICBC, China's biggest bank.
China's economy grew an annual 6.9 percent last year - the lowest in a quarter of a century. A stock market rout last year sent the benchmark Shanghai index down more than 40 percent from its mid-June peak, wiped out trillions of dollars in capitalisation and sparked sell-offs around the world. ICBC's non-performing loans (NPL) ratio rose to 1.50 percent in 2015 from 1.13 percent the year before, the statement showed. But the bank played down the increase, saying the level was "relatively superior" to its domestic and overseas peers.
"Given the macro background of a new normal in economic and financial development, the bank's operating results were in line with expectations and were hard-earned," it said. Separately, the Bank of China (BOC) - another of the country's "Big Four" state-owned lenders and the main foreign exchange bank - reported that net profit rose 0.74 percent to 170.85 billion yuan last year.
The bank's ratio for bad loans also increased, rising to 1.43 percent from 1.18 percent in 2014, its statement said. "The global economy is going through the longest and most sluggish recovery since the Great Depression of the 20th century," bank chairman Tian Guoli said in a statement.
"China's economy is at a critical juncture, in which growth is shifting gear, the economic structure is adjusting and the driving impetus is changing," he said, although he added the country could maintain a medium to high rate of growth. China is seeking to shift its economic drivers away from cheap exports and massive government investment to domestic consumption but leaders have warned of slower growth under the "new normal". Ahead of the results announcements, ICBC closed up 1.65 percent and BOC rose 1.80 percent in Shanghai trading.