China Banks Report Robust Earnings Growth

Chandrasekhar Atreya
29 Oct, 2010
New York City

Stocks in China region closed lower. Two of the five largest banks were the latest to report surging profits. ICBC and Bank of Communications earnings surged more than 24%. Profit growth accelerated at listed companies in the third quarter.

[R]5:00 PM Hong Kong, China – Stocks in China region closed lower. Two of the five largest banks were the latest to report surging profits. ICBC and Bank of Communications earnings surged more than 24%. Profit growth accelerated at listed companies in the third quarter.[/R]

Stocks in China ended lower on Friday pushing the benchmark index down nearly 0.5% and stocks in HK traded lower tracking losses in mainland China.

CSI 300 Index in China dropped 0.52% or 17.71 to close at 3,379.98. The index was marginally up for the week by 0.04% and surged 17.57% for the month. The benchmark index in Shanghai dropped 0.46% for the day but gained 0.13% for the week and 14.1% for the month.

Hang Seng Index in Hong Kong fell 0.49% or 114.54 to close at 23,096.32. For the week the index fell 1.79% and for the month gained 3.21%.

Two more of China’s big five banks reported quarterly profits increase on the rising demand for loans and robust economic activities. The third quarter net profits at Industrial and Commerce Bank of China and Bank of Communications soared over 20%.

ICBC’s profits rose 27% to 42.6 billion yuan in the third quarter ended September. BoCom reported a 24% rise in third quarter profits to 9.2 billion yuan, slightly lower than the market forecast.

Listed companies in China reported a surge in net profit in the first nine months of this year, according to data released Friday.

The net earnings of 1,232 public companies soared 52.42% from a year earlier to 197.5 billion yuan in the first nine months of the year, according to the earnings released so far. The earnings growth accelerated from the 41.17% increase in the first half of the year.

China’s largest oil producer PetroChina Co reported a 13% increase in third quarter profit as it benefited from higher prices and surging demand.

The company earned 34.7 billion yuan for the quarter to September, its best quarterly profit in almost two years, according to the company’s report released early Thursday. The company had earned 30.8 billion yuan a year earlier.

China and the European Union have agreed to pursue jointly financed research that will be focused on developing technologies for cleaner, less polluting and safer aircrafts for production and sharing.

The plan was announced in the Expo in Shanghai and will initially involve three main projects with budgets totaling 70.5 billion yuan, to be shared by the European Commission and China’s Ministry of Industry and Information Technology.

Growth of China’s industrial sector is hindered by higher production costs and a rapidly appreciating yuan, according to a government source.

In the first nine months of 2010, prices of raw materials, fuel and power rose 9.8% from a year ago, while ex-factory prices for goods climbed only 4.3%, said Zhu Hongren, a spokesman for the Ministry of Industry and Information Technology in Beijing on Thursday.

China said Thursday it will not use the export of rare earths as a bargaining tool as it seeks international cooperation in the use of these minerals, according to a government official.

“China will not use rare earths as a bargaining tool,” Zhu Hongren, Chief Engineer and spokesman for the Ministry of Industry and Information Technology, said at a news conference in Beijing on Thursday.

Nissan Motor Co said it is recalling 2.14 million vehicles worldwide, including 194,409 cars sold in mainland China, to repair a faulty ignition relay that the carmaker said could cause engine problems.

This is also the third largest recall by Nissan, which said no accidents have been reported till date due to this defect. In Japan alone it will recall 761,258 vehicles of nine models produced between 2003 and 2006, apart from 761,528 in the U.S. and Canada and 354,170 vehicles in Europe.

The pace of growth in electronic exports from China slowed in the third quarter due to an appreciating yuan, the industry regulator said Thursday.

For the period July to September, electronic exports rose 25.3% annually, much below the growth of 31% in the first half of the year.

China shut down 2,087 firms in 18 industrial sectors with outdated capacity were shut down, the Ministry of Industry and Information Technology said Thursday.