Chinese banks' profitability to improve in 2018
Profitability and asset quality of Chinese commercial banks are set to improve further in 2018 after they stabilized this year, Bank of Communications said in a report last week.
The banks profited from a better-than-expected macro-economic growth and the government’s prudent and neutral monetary policy, the report said.
The net profit of the commercial banks is expected to grow 6.5 percent next year from that in 2017, with improved net interest margin — a key measure of lenders’ profitability — contributing to around a quarter of the growth.
Banks’ non-interest income, meanwhile, is projected to contribute to 1 percent of the growth in net profit, the report said.
The non-performing loan ratio is forecast to range between 1.7 percent and 1.75 percent for the whole of 2018, the report said.
The NPL ratio for 2017 is estimated at 1.74 percent, according to the report.
The industry will diversify in 2018 and beyond, the report said, as banks face challenges posed by expanded market-oriented reform of interest rates, and have to upgrade financial technologies to stay ahead of their competitors and meet the demands of their customers.