Bank of China eases profit expectations
(30 March 2016 – China) Bank of Communications Co Ltd has indicated that it might not reach 1 percent profit growth this year, blaming a heavy reduction in corporate banking and increase in bad debts.
China’s fifth largest bank reported its fourth year of slowing profit growth earlier this week, while the bank's bad loan ratio increased for the 15th consecutive quarter.
"To maintain 1 percent net profit won't be easy," BoCom's president Peng Chun said during a news conference in Hong Kong.
For 2015, net profit rose 1 percent from a year earlier to 66.53 billion yuan (A$13.34 billion), according to the bank’s annual results released on the Hong Kong and Shanghai stock exchanges.
Borrowers have struggled to repay loans as the economy slows, prompting a dive in corporate banking gross profits, which fell 18.1 percent to 44.5 billion yuan.
BoCom has previously highlighted the manufacturing sector as a large source of corporate loan defaults. By the end of 2015, the bank’s corporate impaired loan balance rose 30 percent to 44.284 billion yuan.
BoCom's non-performing loan ratio rose to 1.51 percent by end-December, from 1.42 percent in the previous quarter.
Profit rose 1 percent to 14.5 billion yuan in the three months through December versus the same period a year prior, according to a Reuters calculation from BoCom's figures.
The result compared with the 13.3 billion yuan average estimate from 21 analysts polled by Thomson Reuters on their expected yearly net profit.
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