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MarketScreener Homepage  >  Equities  >  Hong Kong Stock Exchange  >  Agricultural Bank of China Limited    1288   CNE100000Q43

AGRICULTURAL BANK OF CHINA LIMITED

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China's banks seen facing persistent bad loan pressures after third quarter earnings drop

10/30/2020 | 07:15am EST
FILE PHOTO: People walk past a branch of Industrial and Commercial Bank of China (ICBC) in Beijing

BEIJING/SHANGHAI (Reuters) - China's largest state-owned lenders will see bad loan pressures persist in coming quarters as some borrowers face difficulties in repaying loans after months of inactivity, analysts said on Friday after a slew of banks posted lower quarterly earnings.

Five of country's top banks, including the world's largest bank Industrial and Commercial Bank of China (ICBC), posted declines in third-quarter profits though they recovered slightly from record profit dives in the second quarter.

China has brought in a series of policies to combat the impact of COVID-19 shutdowns on the economy, but as some forbearance measures are to expire senior bankers have already warned that soured debts would continue to emerge later this year and into next.

Guo Yi, an analyst with Wanlian Securities, said the degree of economic recovery will impact expectations for the asset quality of banks, with banks likely to see corporate loan repayment pressure peaking around mid-2021.

The government has guided banks to conduct a lending push to support the virus-hit economy and coming months will inevitably show how many of those loans prove to be of poor quality.

ICBC, the world's largest bank by assets, posted a 4.7% fall in third-quarter profit.

Following suit were Bank of Communications Co (BoCom), Bank of China Ltd (BoC) and Agricultural Bank of China Ltd (AgBank), all of which reported lower earnings.

China Construction Bank Corp (CCB) had also posted a fall over the same period on Thursday.

Lenders are likely to see less pronounced profit falls in the coming fourth quarter, but their performance will also be influenced by future policies and regulations, said Wang Yifeng, an analyst with Everbright Securities.

ICBC, CCB, BoC and AgBank all posted rising non-performing loan ratios, while BoCom said its soured debt ratio held steady.

During the height of the pandemic earlier this year, China had asked banks to delay pushing borrowers for repayments in an effort to ease cash flow woes.

Net interest margins, a key measure of profitability, varied across the board.

At BoCom, the margin rose but at the other lenders it either fell or held steady. AgBank didn't report the indicator for the last quarter.

($1 = 6.6866 Chinese yuan)

(Reporting by Cheng Leng and Zhang Yan in Beijing, with Engen Tham in Shanghai; Editing by Edwina Gibbs and David Holmes)


© Reuters 2020
Stocks mentioned in the article
ChangeLast1st jan.
AGRICULTURAL BANK OF CHINA LIMITED 4.42% 3.07 End-of-day quote.8.10%
BANK OF CHINA LIMITED 2.16% 2.84 End-of-day quote.7.17%
BANK OF COMMUNICATIONS CO., LTD. 1.79% 4.55 End-of-day quote.10.98%
CHINA CONSTRUCTION BANK CORPORATION 1.72% 6.49 End-of-day quote.10.19%
EVERBRIGHT SECURITIES COMPANY LIMITED 9.99% 17.07 End-of-day quote.-7.83%
INDUSTRIAL AND COMMERCIAL BANK OF CHINA LIMITED 3.60% 5.47 End-of-day quote.8.75%
UNITED STATES DOLLAR (B) / CHINESE YUAN IN HONG KONG (USD/CNH) 0.18% 6.5202 Delayed Quote.0.20%
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Financials
Sales 2020 660 B 102 B 102 B
Net income 2020 200 B 30 842 M 30 842 M
Net Debt 2020 - - -
P/E ratio 2020 4,62x
Yield 2020 6,68%
Capitalization 1 149 B 177 B 177 B
Capi. / Sales 2020 1,74x
Capi. / Sales 2021 1,61x
Nbr of Employees 464 011
Free-Float 63,0%
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Mean consensus BUY
Number of Analysts 24
Average target price 3,19 CNY
Last Close Price 2,57 CNY
Spread / Highest target 63,8%
Spread / Average Target 24,3%
Spread / Lowest Target -11,2%
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Managers and Directors
NameTitle
Qing Song Zhang Vice Chairman & President
Jing Dong Wang Chairman-Supervisory Board
Shu Gu Chairman
Xing Xiao Independent Non-Executive Director
Xin Xin Wang Independent Non-Executive Director