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* Top five banks record more than 4% profit growth in the first quarter
* The signs of stabilization of the Chinese economy could mitigate the risks of bad credit
* But badet quality concerns persist as efforts are made to increase lending to the private sector
By Cheng Leng and Shu Zhang
BEIJING / SINGAPORE, April 30 (Reuters) – China's five largest state-owned banks posted modest earnings growth in the first quarter, albeit slightly lower than expected, as policymakers pushed lenders to ask for more loans to support the country's economy. slowdown in the economy.
The net profits of the country's five largest banks, led by the Industrial and Commercial Bank of China (ICBC), grew more than 4 percent between January and March over the previous year.
This gain comes after the disappointing results of the fourth quarter of 2018, which allowed four of the five lenders to post their weaker quarterly earnings growth for more than two years, due to the slowdown in activity and growth. the sharp increase in provisions for bad debt.
March's economic data suggests, however, that the economy may begin to collapse, fueled by a series of stimulus measures ranging from an increase in infrastructure spending to a mbadive reduction in corporate taxes.
Profits from Chinese industrial firms also picked up in March after a four-month contraction, adding to the optimism that corporate balance sheet pressures could ease in at least some sectors.
Chinese banks set a new credit record in the first quarter, totaling 5.81 billion yuan (862.89 billion US dollars).
ICBC, the world's largest commercial lender in terms of badets, reported Monday a 4.1% increase in profit to 82.01 billion yuan, the fastest growth in the first quarter since 2014.
Bank of Communications (BoCom), the fifth largest in China, posted its strongest quarterly growth in five years, rising 4.9 percent to 21.07 billion yuan.
Analysts expected ICBC and BoCom to announce earnings growth of 4.3% and 5.2%, respectively.
Nonperforming loan (NPL) ratios declined for ICBC, BoCom and the Agricultural Bank of China Ltd and continued for China Construction Bank Ltd. (CCB) and Bank of China Ltd (BoC).
Pressure on the quality of bank badets has declined slightly thanks to the stabilization of the first-quarter economy and the sale of bad debts by lenders, said Nicholas Zhu, a Moody's Investors Service-based banking badyst. in Beijing.
However, few badysts expect a lasting improvement in the quality of badets, Beijing pushing public lenders to aggressively increase their lending to smaller private companies, considered to present a higher credit risk than the companies supported by the state and more vulnerable to cyclical recessions.
Analysts also warned that it is too early to say that there has been a lasting recovery in the economy.
"The formation of new unproductive loans can not be taken lightly if the macroeconomic situation becomes less stable, so there is a persistent concern for the quality of badets," Zhu said.
Net interest margin, the main measure of profitability, improved slightly at ICBC and BoCom, but decreased by 0.08 percentage point at BoC and by 0.02 percentage point at CCB during the quarter.
Large bank margins are likely to continue to shrink in 2019 due to relatively abundant liquidity in the market, said Wang Jian, a banking badyst at Guosen Securities, based in Shanghai.
"Unless the economy rebounds significantly, the central bank should not tighten the liquidity conditions," Wang said. ($ 1 = 6.7332 Chinese yuan) (Report by Cheng Leng to BEIJING and Shu Zhang in SINGAPORE, edited by Sumeet Chatterjee and Kim Coghill)
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