The lenders are also expected to see quicker or stable
growth in net profit this year. Net income growth of Bank of
Communications , for instance, is estimated
to quicken to 7.21% in 2023 from 4.75% in 2022, the data showed.
As Beijing's fiscal policy support takes effect and business
activities pick up gradually, net interest margin of the banking
sector is expected to rebound in the second half of the year,
said Wang Yifeng, a banking analyst at Everbright Securities Co.
The margin will also be bolstered by a recovering economy,
when local banks in the longer term are able to charge clients
higher lending interest rates, he said.
Banks cut rates on deposits, a key source of funding, to
ease pressure on margins last year after successive lending rate
cuts to cushion the economy from the impact of a property debt
crisis and China's strict zero-COVID policy.
"Credit expansion will continue during the process of
gradual recovery of the economy," Wang said. "Along with
government policies stabilising the economy taking effect, the
banking sector hopefully can achieve stronger gains."
January's new bank loans more than tripled December's tally
and exceeded expectations, data showed on Friday, as the central
bank looks to kick-start the economy.
The January loan data shows bank loans were the "main
channel" and perhaps provided a cheaper way of raising funds
than in the credit market compared to last year, Iris Pang,
Greater China chief economist, at ING wrote in a report.
HOUSEHOLD LOANS
Investors will be closely tracking comments on credit growth from top Chinese lenders including Bank of China and Agricultural Bank of China when they report their financial results for 2022 next month. Expectations for new loans this year range between 22.3 trillion yuan ($3.29 trillion) to 23 trillion yuan, according to a Reuters survey of five analyst estimates, higher than 21.3 trillion yuan last year. Bankers said they were betting on a bounce back this year in household loans - mostly mortgages - as consumption is expected to surge, with some banks raising their retail lending targets. There are tentative signs that new home sales across various cities have risen sharply as sentiment improves.
Deng, a manager at a branch of PingAn Bank Co in southern China's Guangdong province, said last year his team could manage to achieve only 60% of the target to issue 30 million yuan in retail loans. This year the target has been raised by 10%. "This target will be achievable." Deng said. "Business activities are resuming and people are more willing to spend." The benchmark Chinese banking sector index is down 0.7% so far this year, versus a 10.4% fall last year. (Reporting by Ziyi Tang and Ryan Woo; Editing by Sumeet Chatterjee and Jacqueline Wong)
