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China Banks Could Slow Down in 2013

China’s lucrative banking sector will experience narrowing net profit increases in the next year, weighed down by the interest rates reform initiated by the Chinese central bank’s two consecutive rate cuts, experts have predicted.

Zhou Kunping, vice general manager with the financial research center of the Bank of Communications, predicted that the net profits of China’s banks will slow to single-digit growth in 2013, as the whole sector is expected to face more supervision.

His words were echoed by Guo Tianyong, researcher of the Central University of Finance and Economics. Guo said banks, especially small-and-medium-sized ones, will be confronted with more pressure as the the interest rate is now more market-oriented.

To refuel the slowing economy, the People’s Bank of China introduced two interest rate cuts in June and July, which, experts believe, served as a prelude to a reform of interest rates.

China’s banking sector has often been questioned for its unreasonably huge profits.

The combined net profits of all the 16 banks listed on the Shanghai and Shenzhen stock exchanges totalled 812.77 billion yuan (129.23 billion U.S. dollars) in the first three quarters of 2012, accounting for over half of the profits of the 2,493 listed firms.

via Xinhua [1]

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Alfonso Esparza

Alfonso Esparza [6]

Senior Currency Analyst at Market Pulse [7]
Alfonso Esparza specializes in macro forex strategies for North American and major currency pairs. Upon joining OANDA in 2007, Alfonso Esparza established the MarketPulseFX blog and he has since written extensively about central banks and global economic and political trends. Alfonso has also worked as a professional currency trader focused on North America and emerging markets. He has been published by The MarketWatch, Reuters, the Wall Street Journal and The Globe and Mail, and he also appears regularly as a guest commentator on networks including Bloomberg and BNN. He holds a finance degree from the Monterrey Institute of Technology and Higher Education (ITESM) and an MBA with a specialization on financial engineering and marketing from the University of Toronto.
Alfonso Esparza