November 21 -- Assets held by China’s commercial banks hit 83.3 trillion yuan at the end of the third quarter, up 16.7 percent year-on-year, or 908.7 billion yuan from the end of the second quarter, reports National Business News, citing the China Banking Regulatory Commission (CBRC).
For the first three quarters, Chinese commercial banks posted a 35.4 percent year-on-year, or 213.8 billion yuan, increase in cumulative net profit to 817.3 billion yuan.
The average return on assets rose 0.17 percentage point year-on-year to 1.38 percent during the first three quarters, while the average return on capital was 22.1 percent, up 0.98 percentage point.
According to a banking industry insider, Chinese banks enjoy average interest margins of approximately three percent due to China's rapid economic expansion, compared to the one percent usually earned by foreign banks.
The insider said industry profitability will decline as the rate of economic growth slows, and the interest margin shrinks.
During the first half of 2011, 3,000 listed companies had posted total net profits of 990 billion yuan, while the 16 public-listed banks recorded net profits of 460 billion yuan, approximately half of the total.
The proportion is projected to hit 65 percent by the end of 2011, said Liu Yuhui, president of the Financial Research Lab under the Chinese Academy of Social Sciences.
Commercial banks had total non-performing loans (NPL) of 407.8 billion yuan at the end of the third quarter, down 25.8 billion yuan from the beginning of 2011, reducing the NPL ratio by 0.18 percentage point to 0.95 percent.
Liu Mingkang, the former president of the CBRC, said the NPL ratio will hit two percent if it includes the impact brought about by the problems in the local government financing platforms and real estate sectors, and in changes in industrial structure.
Bank of China's International Finance Research Institute forecasts the NPL of commercial banks to range from between 1.61 percent and 3.24 percent over the next five years.
Shares of Hua Xia Bank (600015) fell 0.76 percent to close the morning session at 10:41 yuan per share.
Source:CapitalVue