Business     

EY: Profits of Chinese listed banks up 12.83% in 2013

China.org.cn, May 8, 2014

• Geoffery Choi (L), Greater China FSO Assurance Managing Partner, and Steven Xu (R), a partner from Ernst & Young, explain the EY's 7th report on China's listed banks released today in Beijing. [photo by Guo Xiaohong]

  
  
  

  China's 19 listed banks achieved growth of 12.83 percent in 2013, despite the shrinking interest margin in the wake of the country's interest rate liberalization, according to the Ernst & Young (EY) report, "2013 Review of China's Listed Banks and Outlook" released today in Beijing.

  In 2013 the listed banks kept up their growth, yet it came at a slower pace.

  The aggregated net profit of the listed banks hit 1,181.56 billion yuan in 2013, up 12.83 percent from 2012. Yet in 2012, the figure was 17.37 percent higher than 2011. The slower pace was due to a slowdown in asset expansion, the shrinking interest margin and the provisioning for loan losses.

  The ratio of the net interest income of these banks accounted for 77 percent of the total revenue in 2013, two percent lower than 2012, while intermediary business climbed from 18 percent in 2012 to 20 percent in 2013, according to the report.

  To cope with the interest rate liberalization, Chinese banks transformed their business structure last year. They adjusted their structure of assets and liabilities, reduced high cost debt, and enhanced intermediary business, said Steven Xu, a partner from Ernst & Young.

  The 19 listed banks beefed up their intermediary business last year and witnessed many new growth points resulting from this, like wealth management, intermediary private banking, trusts and investment banking.

  Geoffery Choi, Greater China FSO Assurance Managing Partner, said Internet financing is a big challenge for China's traditional banks, as it creates fierce competition in online financing. The newly emerged internet financing companies have expanded their business extremely rapidly, and even moved into the core business of Chinese banks including credit, personal financing and fund services.

  Yet it is good to see many Chinese banks adopting measures to face the challenges like developing fresh high-quality financial products and establishing special teams to do so, said Choi.

  Despite the many uncertainties ahead, there are still many opportunities for China's banking industry, thanks to the country's new moves in industrialization, urbanization and the information industry. China's economic transformation will also leave a lot of room for development. Chinese banks need to continue changing their patterns of development, promote business transformation and offer diversified services. These services will be their engine for sustainable growth, both Xu and Choi agreed.

  The banking report released today was Ernst & Young's 7th annual report on listed banks in China, containing an in-depth analysis of the profitability, assets and debt structure, asset quality, capital and liquidity of 19 listed banks in China. It provides insights and an outlook on China's banking sector based on the current business and operating models of these listed banks and the external regulatory environment in which the banks operate.

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