(23 August 2012 – China) China Merchants Bank Company (CMB) reported a second quarter net income of US$1.8 billion (A$1.7 billion) a huge 20 percent larger than the year before, triggering a sell-off at the Hong Kong exchange that dragged down other major Chinese banks.China’s first private bank said its net interest margin fell 21 basis points from the prior quarter while non-performing loans rose by 4 percent.
The bank’s Hong Kong listed shares traded lower on Monday afternoon, as did those of China’s Big Four state-owned banks. Analysts remain pessimistic about the outlook for China’s banking sector while brokers cited risks to China’s banking sector as a whole including the fallout if China’s growth rate slows significantly, and the potential for sudden changes in government regulation.
J.P. Morgan also took a cautious tone towards China’s banking sector. It said that second-quarter results at CMB reflect the range and depth of issues facing the China banking sector.
CMB’s results came ahead of those from larger banks, including China Minsheng Banking Corporation, Agricultural Bank of China Ltd. and Bank of China Ltd., all of which are slated to release earnings today.