Big Banks Profiting Atop "Made in China"
In contrast with China's export slowdown and the performance decline of domestic listed manufacturing companies, China's banking industry is seeing surprising profit growth. In the first half of the year, net profits for 14 listed banks totaled 230.026 billion yuan, an increase of 99.15% on average.
Bank Profits High Amid Severe Economic Weather, but Will It Last?
It's just past the half-year, and as A-share listed companies one after another release their first half results, the banking industry is reporting good profit growth, in clear contrast with the profit declines in other industries. This doesn't mean, however, that banks can survive the current economic slide unscathed.
CDB and ABC: Risk Control a Problem on the Road to Reform
China's National Auditing Office has exposed huge amount of loans from banks being misappropriated. Problems revealed include borrowed funds illegally flowing into the stock market and real estate. Auditors found that China Development Bank (CDB) loans to the tune of 24.6 billion yuan had been so misused, while the total for the Agricultural Bank of China (ABC) was 24.3 billion yuan.
China Construction Bank Holding $3.250 billion of Fannie Mae, Freddie Mac Bonds
China Construction Bank (CCB), China's second largest bank by assets, revealed in its half-year financial report that it is holding $3.250 billion (RMB 22.279bn) of bonds issued by Fannie Mae and Freddie Mac, the massive US home loan guarantors, amounting to 0.32% of its total assets. Although less than half of leading Hong Kong brokerage house CLSA's estimation of $7 billion, it is still beyond industry expectations.
CIC to Halve ABC Capital Injection, so Has More to Invest Overseas
The Agricultural Bank of China (ABC), in the throes of reform, had hoped for a capital injection of $40bn to smooth its road. It will surely have been disappointed to learn that it will get half that much, but that means that the China Investment Corporation (CIC), China's sovereign wealth fund and the source of the injection, will keep that extra cash to put into its own overseas investments.
Chinese Banks' Loss in CMS a "Black Swan" Event ?
China has long touted its commitment to the development of markets for financial derivatives, but has just as long shied away from actually opening anything serious. Regulators seem to see those critters as awfully slippery and prone to do as much damage as good. Unfortunately, their darker instincts have proven true, at least for one instrument going around China these days and helping domestic participants pile up big losses.
Agricultural Bank of China to Receive $20 Billion Injection
Lacking of a proper business model, the Agricultural Bank of China's (ABC) reform program has made little headway in the past several years. Now, however, to kick reform efforts into gear ABC is to receive a $20 billion capital injection from Central Huijin Investment Company, a subsidiary of China Investment Corporation, China's sovereign wealth fund.
PBoC Allows Banks 5% Lending Increase
China's monetary and supervisory authorities are loosening credit limits in the second half of the year. Commercial banks have received notice from the People's Bank of China (PBoC) saying that the credit limits for the second half of the year are to be raised by 5%. This number is lower than the expected 400 billion yuan, indicating PBoC's preference for monetary policy "tight with proper adjustment".
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