Merchants bank earnings seen lower
(Shenzhen Daily/Agencis)
Updated: 2005-08-17 10:15

China Merchants Bank Co., China’s top domestically listed lender, is expected to post its slowest quarterly earnings growth in two years after tackling nationwide lending curbs and its own swelling pool of sour debt.

But its loans expansion might have re-accelerated in the latter half of this year — boding well for net profit — as the Central Government urges its banks from behind the scenes to lend more in an effort to combat an anticipated economic growth slowdown, analysts say.

From April to June, net profit is expected to rise by a tenth to 878.7 million yuan (US$108.5 million) — its slowest growth in eight quarters and well off a 60 percent rise in last year’s second quarter.

Merchants Bank’s president warned in May of rising bad debt and decelerating loans growth, adding that if 2005 profits rose less than 20 percent the firm would forego a planned overseas share listing.

Merchants Bank’s top 10 clients are mainly transport or energy-related companies: from coal giant Shenhua Group to China Ocean Shipping, the country’s largest shipper, sectors which have largely escaped the government’s credit tightening.

Merchants Bank took on additional nonperforming loans of 800 million yuan from January to April, president Ma Weihua said in a speech to management.

Merchants will be the first Chinese listed bank to report earnings later this week, expected Friday.

Others to follow include Pudong, Shenzhen Development Bank —controled by Newbridge Capital — and Hong Kong-listed Bank of Communications, one-fifth owned by HSBC Holdings Plc.

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