Loan business in H1 positive but concerns about future remain

BEIJING, Aug 31, 2008 (Xinhua via COMTEX) -- BACHF | Quote | Chart | News | PowerRating -- Interim reports of 13 listed commercial banks show an average loan growth rate of 10.51 percent for the first half. However, there are concerns about the loan business in the future due to uncertainties from macro economic regulation and slowdown in economic growth.

Among the 13 banks that released interim reports as of Aug. 28, Bank of Ningbo (002142.SZ) posted a loan growth rate of 20.20 percent, a relatively high rate, while the Industrial and Commercial Bank of China (ICBC) (601398.SH, 1398. HK) only saw loan growing at 6.9 percent.

Nine of the 13 banks kept their NPL ratio below 2 percent. ICBC, China Construction Bank (CCB) (601939.SH, 0939.HK) and Huaxia Bank ( 600015.SH) had over 2 percent of NPL ratios. And Shenzhen Development Bank (000001.SZ) reported the highest NPL ratio of 4.64 percent.

Apart from China CITIC Bank (601998.SH), China Minsheng Bank ( 600016.SH) and Huaxia Bank (600015.SH), other banks witnessed decline in non-performing loan (NPL) ratio.

"The drop in NPL ratio is mainly attributed to enhanced efforts in liquidating and writing off bad assets during the report period," Zhao Qingming, senior manager of the research division of CCB said.

"If the national economy slows down, the NPL outstanding of commercial banks will increase inevitably, hence the NPL ratio," said zhao.

Commercial banks now have reached the apex of profit growth and will face the risk of worsening asset quality in the future, Jiang Chaoliang, chairman of the Bank of Communications, expressed the same concern at the release of interim results.

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