By Bloomberg News – Aug 23, 2013 6:42 AM GMT
Industrial & Commercial Bank of China Ltd., the world’s most profitable lender, and its three largest local rivals are set to post the slowest earnings growth since 2010 as China’s economy falters and bad loans jump.
The four banks, among the world’s nine biggest by market value, will probably report combined second-quarter net income of 207 billion yuan ($34 billion), an increase of 10 percent from a year earlier, according to the median estimate of 11 analysts surveyed by Bloomberg News. Profit at the four largest U.S. banks climbed 35 percent to $20.2 billion.
The slower earnings growth may weigh on Chinese banking shares, already trading near record-low valuations on investors’ concern that an economy set to expand at the weakest pace in 23 years will curb loan demand and spark more defaults.Premier Li Keqiang triggered higher funding costs for banks this year with a crackdown on off-balance-sheet lending aimed at containing risks from an unprecedented credit boom.
“China’s banks have entered a downward spiral on profit growth,” said Rainy Yuan, a Shanghai-based analyst at Masterlink Securities Corp. “Loan margins are shrinking, interest income is slowing and authorities are clamping down on shadow banking while China’s economic slowdown has hindered asset expansion.”
ICBC (1398), the largest Chinese lender by assets, will probably say on Aug. 29 that its net income climbed 9 percent to 67.4 billion yuan, allowing the Beijing-based company to retain its spot as the world’s most profitable bank, according to the analysts’ estimates.