China Banks Post Better Than Expected Profits

China’s top four banks posted better-than-expected quarterly profits this week, even as their stock market valuations remain the lowest in Asia, highlighting how pessimism about slowing Chinese economic growth is overshadowing resilient profitability in the sector.

After years of break-neck gains, profit growth at Chinese banks is expected to slow sharply this year as new loan growth moderates and profit margins get squeezed by policy reforms allowing banks to offer higher rates on customer deposits.

This, along with concerns about a rise in non-performing loans as the slowing economy and rising indebtedness pressure borrowers, have driven China bank share prices down hard this year. Chinese banks are trading at rock-bottom valuations despite reporting profits that would still be the envy of lenders in other markets.

via Reuters

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Alfonso Esparza

Alfonso Esparza

Senior Currency Analyst at Market Pulse
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