Wolters Kluwer Financial Services Reveals Overall Profitability of Chinese Banks is Falling
Releases Annual Report of Listed Chinese Banks 2014, Providing Expert Analysis of 16 Institutions
The overall profitability growth rate of the 16 banks listed on the Chinese A-stock market fell to 7.68% for 2014, compared to a figure of 12.78% for the previous year. That’s according to research from Wolters Kluwer Financial Services, which today released the Annual Report of Listed Chinese Banks 2014. The report, produced in partnership with Wolters Kluwer China, also reveals that competition between traditional banking and web based banking is set to intensify in the country.
The fall in overall profitability of the Chinese banking industry was due to a decline in economic growth, interest rate marketization and competition with internet banking, Wolters Kluwer Financial Services found. Listed Chinese banks’ net profits, attributable to the parent company, amounted to 1,247.38 billion yuan in total for 2014. Nine of the 16 banks reported growth of less than 10% for 2014.
Other findings from the global risk and regulatory technology firm show that total assets of the banks covered in the report reached CNY 105.76 trillion, an increase of 10.63 trillion yuan from the end of 2013. This was due to the growth of credit assets and securities investment. Conversely, inter-banking assets contracted during the report period.
“With the continuous development of technology and increased financial innovation, traditional banking channels will be weakened in China,” said Spark Wang, senior regulatory intelligence expert at Wolters Kluwer Financial Services. “Newly opened private banks, such as the Shanghai Hua Rui Bank, will be dedicated to web based financial services. The competition between such new types of financial institutions and traditional banks will intensify, particularly in the deposit and lending business.”
Notably, the balance and ratio of non-performing loans both increased. By the end of 2014, the total amount of the banks’ non-performing loans was more than CNY 668.3 billion, representing an increase of nearly 40%. All 16 banks had an increase in non-performing loans. The report notes that the greatest concentration of these loans is in the Yangtze River Delta.