China Construction Bank 2015 net profits flat

[SHANGHAI] China Construction Bank (CCB), one of the country's "Big Four" state-owned lenders, reported flat growth in net profit last year, as bad loans jumped with economic growth slowing.

The bank's net profit edged up 0.14 per cent year-on-year to 228.15 billion yuan (S$47 billion) in 2015, slowing from a 6.1 per cent annual increase in 2014, according to a statement released late on Wednesday.

The bank said it "witnessed a more complex and changing global economic situation" including volatility in global financial markets and commodity prices.

China's economy - the world's second largest - grew 6.9 per cent in 2015, the slowest pace in a quarter of a century.

The government is seeking to shift its economic drivers away from cheap exports and massive government investment to domestic consumption but has warned of slower growth under what leaders have dubbed the "new normal".

"The growth in net profits of banks has dropped significantly due to fast rises in non-performing loans," Guotai Junan Securities analyst Richard Cao told AFP.

CCB's non-performing loan (NPL) ratio reached 1.58 per cent last year, up from 1.19 per cent in 2014.

The bank's Shanghai-traded shares were down 0.82 per cent by the break on Thursday after the results announcement.

Two other major banks, Industrial and Commercial Bank of China (ICBC) and Bank of China (BOC), on Wednesday also reported weak rises in net profit and growing bad loans.

ICBC, China's biggest bank, said that net profit gained 0.48 per cent year-on-year to 277.13 billion yuan in 2015.

BOC, the main foreign exchange bank, reported that its net profit rose 0.74 per cent to 170.85 billion yuan.

A series of interest rate cuts aimed at supporting economic growth have also hurt banks' earnings, analysts said, and the banking sector will continue to feel the pain with China's economy expected to slow further this year.

"A combination of interest-rate cuts and worsening asset quality will continue to have an impact on profitability in 2016," ratings agency Fitch said in a note last week.

AFP