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Medium-sized banks boost industry

By Xu Shenglan (chinadaily.com.cn)
Updated: 2008-04-10 15:44

China's banking industry was boosted over the past year amidst a booming economy and the capital market, with medium-sized banks achieving the highest growth, the China Business News quoted an analyst as saying on Wednesday.

Li Weiqi, a banking analyst from the Sinolink Securities, said annual reports released so far suggested that listed commercial bank profits increased 62.2 percent year-on-year in 2007. Profit of medium-sized banks, large banks and city-level lenders grew by 89.1 percent, 51.1 percent and 52.9 percent respectively.

Industrial Bank, China Merchants Bank, CITIC Bank, and Shenzhen Development Bank were among the fastest growing lenders, he said.

According to Li, the top three factors contributing to the growth of medium-sized banks are the growing scale of business, provision declines, and expansion of net interest margin; While large banks and city banks benefited most from net interest margin and scale growth respectively.

Meanwhile, a favorable business environment last year provided banks with ample capital and lucrative non-interest income. Therefore, rapidly growing banks in all business surely earned more, Li said.

Statistics shows that lenders with rapid growth in interest-bearing assets last year included CITIC Bank (43.5 percent), China Merchants Bank (40.3 percent), Industrial Bank (38 percent), and Shenzhen Development Bank (34.3 percent).

Li also noted that listed city banks underperformed last year in the bullish stock market. Geographically limited, these banks lagged far behind medium-sized ones in growth of broker deposits and commissions. In addition, a higher proportion of bonds in city banks' assets also led to larger paper losses in financial statements, he said.