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Bond Market News
Chinese Banking Majors ICBC, BoCom & CCB Post Resilient Earnings
August 30, 2021
Three of the largest Chinese banks, Industrial and Commercial Bank of China (ICBC), Bank of Communications Co Ltd (BoCom) and China Construction Bank Corp (CCB) reported robust results for 1H2021 on Friday indicating an improvement in economic activity.
ICBC, the world’s largest commercial lender by assets, reported a rise of 9.8% in its net profit to RMB 164.5mn ($25.4bn) in 1H2021 vs. RMB 149.8bn ($23.2bn) in 1H2020. Though the net profits were higher YoY, they were 2.5% lower than RMB 168.7bn ($26.1bn) posted in 1H2019. The bank’s operating income posted RMB 426.4bn ($65.9bn), up 6.0% from RMB 402.3bn ($62.2bn) in 1H2020 and vs. RMB 394.2bn ($61bn) in 2019. The Group’s NPL ratio stood at 1.54%, down 0.04% YoY, and higher by 0.11% vs. 2019. Capital adequacy ratio came in at 17.01%, up by 0.13 from the end of last year. Return on average total assets were 0.96% vs. 0.95% in the same period last year. In the first half of the year, new RMB loans issued by domestic branches reached RMB1.26tn ($190bn), representing an increase of RMB 164.4bn ($25.4bn) compared to last year. CET1 ratio for the group was 13.23% vs. 13.62% last year.
ICBC’s 4.875% 2025s yielding 1.78% and 3.58% perps yielding 2.51% were up 0.02 and 0.05 points to trade at 112.04 and 104.07 respectively.
CCB, the country’s second-largest lender by assets posted a 10.9% rise in its net profits to RMB 154.1bn ($23.8bn) in 1H2021 vs. RMB 138.9bn ($21.5bn) in 1H2020. The net profits were slightly lower than RMB 155.7bn ($24.1bn) posted in 1H2019. The bank’s net interest income rose 5.18% YoY to RMB 296.1bn ($45.8bn) in 1H2021. The income was also 12.4% higher than RMB 263.4bn ($40.7bn) in 1H2019. Annualised return on average assets posted 1.06%, largely flat YoY. The NPL ratio came at 1.53% vs. 1.56% last year and vs. 1.42% in 1H2019. The group’s capital adequacy ratio posted slightly weaker at 16.58% vs. 17.06% as of end-2020. The net loans and advances to customers rose to RMB 17.49tn ($2.7tn), up 7.78% YoY from RMB 16.23tn ($2.51tn) in 1H 2020. Core tier-1 capital adequacy ratio was reported 0.28 percent points lower at 10.59% vs. 10.87% at the end of last year
CCB’s 0% 2024s were stable at 100.13 and it’s 4.25% 2029s were up 0.2 points to 107.28.
BoCom, the country’s sixth-largest lender by assets, reported net profit of RMB 42bn ($6.5bn), up 15.10% YoY. Its net operating income amounted to RMB 134.1bn ($20.7bn), up 5.59% YoY and net interest income came in at RMB 78.5bn ($12.1bn), up 6.28% YoY. The net interest margin increased marginally to 1.55%. As at the end 1H2021, the non-performing loan ratio was 1.60%, down 0.07 vs. end-2020. Loans and advances to customers rose 8.5% to RMB 6.35tn ($980bn) in 1H2021 vs. RMB 5.85tn ($900bn) in 1H2020. The annualised return on average assets came at 0.78% vs. 0.72% last year. The capital adequacy ratio was 0.04 points higher at 15.29% vs. 15.25% as on December 31, 2020. Core tier 1 capital adequacy ratio was reported 0.28 percent points lower at 12.9% vs. 13.18 at the end of last year.
BoCom’s bonds were stable. It’s 0.934% 2023s yielding 0.55% and 3.8% perps yielding 2.71% were trading at 100.71 and 104.28 respectively.
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