China

Details

  • Industry: Financial Services, Banking
  • Type: Press release
  • Date: 9/15/2010

2010 interim results for listed banks 

15 September 2010, Hong Kong

 

Part I - Hong Kong

 

Hong Kong listed banks1

Net profit after tax for Hong Kong listed banks rose by 25% over the same period last year to HKD 47.8 billion, benefitting from lower loan impairment charges and higher profit contribution from associated companies.
Net interest income fell 1.5% to HKD 53.4 billion due to narrowing margins which outweighed the impact of loan growth.
Net fee and commission income rose by 21% to HKD 26.3 billion, riding mainly on loan growth and a pick up in the sale of wealth management products.
In this prolonged low interest rate environment, operating profit before impairment charges rose by 3.2% only. If we exclude the impact of investment write-downs of at least HKD 2.8 billion2 booked in the first half of 2009, this actually fell by 2.1%.
The impaired loan ratio improved to 0.77% at the end of June 2010 from 0.93% at the end of 2009, while the net loan impairment charges for the first half fell by 69% to HKD 2.74 billion.
Capital adequacy remained strong.
The average liquidity ratio was generally down, as loan growth exceeded deposit growth.

 

HONG KONG ECONOMIC ENVIRONMENT

Hong Kong economic growth remained robust, with year-on-year GDP growth of 8% and 6.5% recorded in the first and second quarter of 2010. The lower growth in the second quarter was partly due to a challenging global economic environment as well as the effect of stronger economic recovery seen in the second quarter of 2009. Strong domestic demand continued to support economic growth but also led to higher imports. Although exports remained strong, the increase in imports outweighed growth in exports, leading to a reduction in GDP growth in the second quarter.
A sustained low interest rate regime has helped fuel property prices since the second quarter of 2009. Residential, office and retail property prices rose 21%, 22% and 32% year-on-year in June 2010. Some property prices even reached their 1997 highs. Rental markets also began catching up, with residential, office and retail rental prices rising 11.5%, 12.5% and 19.7% year-on-year in June 2010.
In August 2010, the Hong Kong Monetary Authority (HKMA) announced several measures to curb property prices and safeguard banking stability. (i) Properties valued at HKD 12 million or more are now subject to a maximum loan-to-value ratio (LTV) of 60%. A similar measure was announced back in October 2009 to cut the LTV ratio from 70% to 60% for luxury properties valued at HKD 20 million or more. (ii) The maximum 60% LTV ratio is also applied to all properties which are not for self occupancy. (iii) The maximum debt-servicing ratios (DSR) of borrowers is standardised at 50%. Banks should also stress-test mortgage applicants' repayment ability if the mortgage interest rate rises by at least two percentage points, and limit the stressed DSR to 60%.
Funds raised on the stock market in the first half of 2010 were only 26% of the total funds raised in 2009, and were down by 60% over the second half of 2009. Stock trading volume was down 9% over the second half of 2009 while Hang Seng Index fell from 21,873 at the end of 2009 to 20,129 at the end of June 2010.
Consumer prices rose 2.8% and 1.7% year-on-year in June and July 2010. Excluding all one-off government relief measures and payment of public housing rentals in July 2010, the consumer price index actually rose from 1.7% in June 2010 to 1.9% in July, mainly due to an increase in food prices and private housing rentals.
The three-month period unemployment rate fell to 4.3% in July 2010, the lowest rate since October 2008. The latest bankruptcy data showed that less than 5,000 bankruptcy petitions were filed in the first half of 2010 - 27% lower than in the second half of 2009.

 

HONG KONG BANKING ENVIRONMENT

The US Federal Reserve cut its target interest rate to almost zero in December 2008 and has since kept it at a low level. Commercial banks in Hong Kong have also kept the prime rate at 5% - 5.25% and the Hong Kong dollar savings deposit rate at 0.01% since late 2008. Interbank interest rates stayed low throughout the first half of 2010 as liquidity was abundant. The monthly average overnight HIBOR has stayed at about 0.13% since January 2009 while the monthly average 12-month HIBOR went down from 1.67% in January 2009 to 0.43% in December 2009 and up again to 0.81% in August 2010.
The net interest margin (NIM) for the first quarter of 2010 narrowed to 1.34%, from 1.37% in the fourth quarter of 2009. The interest margin on HIBOR-based lending remained low. Mortgage competition was intense and the majority of new mortgages were priced with reference to HIBOR. By July 2010, 87.4% of new mortgages were being priced based on HIBOR, up from 61.6% in December 2009.
Authorised institutions (AIs) in Hong Kong saw a rise in loans to HKD 3.77 trillion by the end of June 2010, a 14.7% increase over the first six months. Loan growth in the first half of 2010 was broad-based. Trade finance, loans for use outside Hong Kong, and commercial loans saw double digit growth of 36%, 23% and 14.7% respectively. Personal loans saw a smaller growth of 6.7% in unsecured personal lending and 5.1% in mortgages.
Customer deposits for all AIs stayed at HKD 6.35 trillion at the end of June 2010, which was 0.5% lower than at the end of 2009. As loans grew faster than deposits, the loan-to-deposit ratio for all AIs rose from 51.5% at the end of 2009 to 59.4% at the end of June 2010.
The asset quality of retail banks remained healthy. The gross classified ratio continued to decline to 1.20% in March 2010, from 1.35% in December 2009. Bad debt charges came down to 0.04% of average total assets in the first quarter of 2010, down from 0.11% in the last quarter of 2009. The charge off ratio for credit cards continued to improve, to 2.31% in the second quarter of 2010 from 3.10% in the fourth quarter of 2009. The card revolving ratio also declined to 26.3% in the second quarter of 2010, from 28.0% in the fourth quarter of 2009. The three-month mortgage delinquency ratio remained at a very low level of 0.02% in July 2010, down from 0.03% in December 2009.
Offshore renminbi business continued to expand in Hong Kong. Below is a highlight of recent expansion:
- The renminbi trade settlement scheme has been expanded to 20 provinces/cities in China (from previously five cities), and across the world for China's trade counterparties (from previously Association of Southeast Asian Nations, Hong Kong and Macau).
- AIs engaged in cross-border renminbi trade settlement can participate in the mainland's interbank bond market, subject to approval of the People's Bank of China (PBOC).
- Corporate customers can open renminbi accounts and also exchange renminbi in Hong Kong without limits. However, AIs can only square renminbi positions with renminbi clearing banks if it is for cross-border trade settlement.
- AIs can grant renminbi loans to corporate, but not to personal customers or designated business customers.
- The transfer of renminbi between different accounts is not restricted. Customers can therefore transfer renminbi funds to buy wealth management products. Interbank transfer is also possible, paving the way to set up a renminbi interbank market in Hong Kong. Other financial institutions can also open a renminbi account with banks to facilitate their offering of renminbi denominated investment products to customers.
- AIs can also issue renminbi certificates of deposits in Hong Kong.
The HKMA and Securities and Futures Commission (SFC) continued to investigate other Lehman-Brothers-related complaint cases subsequent to reaching an agreement with distribution banks on Lehman minibonds in July 2009. More settlement agreements have been reached with banks on non-minibond Lehman-related investment products. In May 2010, the HKMA and SFC each launched new investor protection measures. The HKMA measures apply to the sale of non-listed derivative products to retail customers. AIs are required to offer a pre-investment cooling-off period to certain groups of customers, such as elderly customers and first-time buyers with a high concentration (over 20 percent of the customer's assets). The SFC measures apply to the sale of unlisted structured investment products with a tenor of more than a year. Issuers are required to provide a five-day 'cooling-off' period to investors.

 

HONG KONG LISTED BANKS' PERFORMANCE

 

Balance sheet

The listed banks grew their balance sheets and customer deposits by 6.7% and 2.8% respectively over the first six months while their loan books saw a double digit growth of 15.0% over the end of 2009. Lending and, more importantly, borrowing appetite have picked up since the second half of 2009 and accelerated in the first half of 2010.
There was double digit growth in corporate loans. Trade finance loans surged 69% in the first six months while commercial loans and loans for use outside Hong Kong grew by 15.2% and 13.0% respectively. Personal loans saw a lower growth, with credit card and mortgage loans growing at 7.0% and 5.4% respectively.
Average capital adequacy is still strong under Basel II at 15.3%, although slightly lower than the 15.9% at the end of December 2009.
Liquidity in the interbank market remained ample. The majority of listed banks saw a decrease in their average liquidity ratio in the first half of 2010. Based on disclosed information, the average liquidity ratio for 2010 first half was at least 43%, which was still well above the regulatory minimum of 25%.

 

Profitability

Overall net profit for listed banks rose 25%. Although net interest income fell 1.5% in the low interest rate environment, total operating income still saw 5.7% growth. Excluding investment write-downs in the first half of 2009, total operating income grew by 2.6% on higher net fees and commission.
Net interest income accounted for 54% of the total operating income in the first half of 2010, compared with 56% for the whole of 2009.
Contributions from deposits and net free funds continued to be impacted by the low interest rates. Net interest margin narrowed as deposit spreads were squeezed, as already near zero rates offered little room to reduce interest rates paid to customers. Aggressive pricing of new mortgages also put pressure on margins. Treasury balance sheet management income continued to be hit by the repricing of assets.
Non-interest income rose 15.6% partly due to higher net fees and commissions which rose by 21%. Excluding the effect of investment write-downs in the first half of 2009, non-interest income increased by 7.8%.
Operating expenses rose 8.8%. Increase in performance-related pay led staff costs to rise by 8.7%.
Operating profit before loan impairment allowances rose 3.2% or fell by 2.1% if we exclude investment write-downs in the first half of 2009. As the credit environment gradually improved since the second half of 2009, the loan impairment charges fell by 69% over the first half of 2009.
Contributions from associates and jointly controlled entities went up by 54% to HKD 5.8 billion. Most of these were contributions from mainland associated banks. Overall, profit before tax rose by 25%.

 

Asset quality

Gross impaired loans fell by 4.7% during the first six months of 2010 to HKD 25.3 billion as the local economy continued to improve. The impaired loan ratio fell to 0.77% at the end of June 2010, from 0.93% at the end of 2009 on lower impaired loans and a larger loan book.
Based on disclosed information, net individually assessed charges and net collectively assessed charges fell by 82% and 58% respectively. New charges fell by 57% while releases and recoveries rose 21%.
The allowance coverage for impaired loans was 46% at the end of June 2010, similar to that at the end of 2009. Impaired loans are not 100% provided as they are made after taking into account collateral values and other expected recoveries.

 

Part II - Mainland China3

 

Mainland China listed banks

The mainland listed banks registered a 31% growth in net profit to RMB 346 billion for the first half of 2010, with growth in both net interest income and net fee and commission income.
Net interest income rose 27% to RMB 656 billion on the back of loan growth and a widening net interest margin.
Net fee and commission income rose 35% to RMB 150 billion. Overall balanced growth was observed in various fee earning services.
Operating expenses rose 24% to RMB 313 billion as staff costs increased by 28%.
The non-performing loan (NPL) ratio fell to 1.28% at the end of June 2010 from 1.57% at the end of 2009 due to loan growth as well as a decline in NPL balances. The ratio of loan allowances to NPL reached 182.7%, up from 152.4% six months ago. Impairment charges on loans rose 10.4% to RMB 69 billion as net collective allowances continued to build up.
The listed banks remained well capitalised as they had all achieved the minimum CAR standard of 8%. The average CAR of all listed banks was 11.4% at the end of June 2010, similar to 11.5% at the end of 2009.

 

MAINLAND CHINA ECONOMIC ENVIRONMENT

Mainland China's economy expanded by 11.1% in the first half of 2010. Investment, consumption and net exports made up 59.1%, 35.1% and 5.8% of the GDP growth, respectively. The European sovereign debt crisis did not impact exports significantly as Chinese factories were still working on the backlog of orders. However, going forward, this may put pressure on exporters.
The consumer price index (CPI) rose by 2.6% year-on-year in June 2010, up from 1.9% year-on-year in December 2009. Soaring property prices and recent bad weather in China increased inflationary pressure. Food, which makes up a third of CPI, rose 3.3% year-on-year in July, up from 2.9% year-on-year in June.
Retail sales growth by value remained strong in June 2010 at 18.3% year-on-year, higher than 17.5% in December 2009. Grain and edible oils sales rose to 25.4% year-on-year in June 2010, from 17.3% in December 2009 while automobiles sales fell to 28.3% year-on-year in June 2010, from 57.7% in December 2009. Car sales slowed as government subsidies, tax breaks and other car purchasing incentives, which drove up car sales dramatically in 2009, were partly unwound.
In April 2010, the State Council introduced a series of new measures to cool the real estate market. The measures include (i) raising down payment requirements on first homes larger than 90 square metres from 20% to 30%; (ii) raising down payment requirements on second homes from 40% to 50% and raising mortgage rates to at least 1.1 times the benchmark interest rate; and (iii) raising down payment requirements and mortgage rates substantially for third and subsequent homes. The property prices in 70 large cities rose 11.4% year-on-year in June 2010, up from 7.8% year-on-year in December 2009. Overall sales value in the first half of 2010 went up 25.4% year-on-year.
Turnover in the stock market slowed in the first half of 2010 compared to the second half of the year, by 28%, though it was 2.1% higher than in the first half of 2009. Stock turnover hit a low in June 2010 and began to recover in July and August following banking initial public offerings (IPOs) during that period. Fund raising via the stock market remained active in the first half of 2010. Although this fell by 20% over the second half of 2009, it rose by 338% over the first half of 2009 as IPOs were halted between September 2008 and June 2009. The Shanghai and Shenzhen composite indices fell from 3,277 and 1,201 at the end of 2009 to 2,398 and 945 at the end of June 2010.
The RMB exchange rate remained stable from the beginning of the year up until 19 June 2010 when China said that it would progress further with exchange rate reform. In the first half of 2010, the renminbi appreciated 0.55% and 18.45% against the US dollar and euro, and depreciated 3.79% against the Japanese yen.

 

MAINLAND CHINA BANKING ENVIRONMENT

The PBOC hiked the RMB reserve ratio three times in the first half of 2010, after keeping it unchanged in 2009. Each of the hikes raised the reserve ratio by 0.5 percentage point, reducing the amount of money available for banks to lend. Since late September 2008, the PBOC has applied an additional 2 percentage points to the reserve ratio for the bigger banks. The current reserve ratio for small and medium-sized banks is 15% (13.5% in 2009) while that for the larger banks was 17% (15.5% in 2009).
The PBOC has kept benchmark lending and deposit interest rates unchanged since the end of 2008. On the other hand, the interbank interest rates began to pick up in the first half of 2010, with the overnight interbank rate rising from 1.12% in January 2010 to 2.20% in June 2010, compared to an average of 0.83% in the first half of 2009. Liquidity tightened in the last quarter of 2010 due to rising concern over the European sovereign debt crisis, regulatory review of the loan-to-deposit ratio and fund raising by the commercial banks.
Total renminbi and foreign currency deposits rose by 12.5% over the first half of 2010 to RMB 68.9 trillion at the end of June 2010. The deposit growth was broad-based across individuals and corporates. Liquidity was still sufficient even after the PBOC raised the RMB reserve ratio by 1.5 percentage points, although at the end of June 2010, the excess over the required deposit reserve ratio maintained by financial institutions fell to 1.82%, down from 3.13% at the end of 2009. The small, medium- and large-sized banks had excesses of 2.86%, 1.79% and 1.39% respectively at the end of June 2010.
Total renminbi and foreign currency loans increased by 11.4% over the first half of 2010 to RMB 47.4 trillion at the end June 2010 as the domestic economy continued to grow. Loan growth has accelerated if compared with the 9.6% growth in the second half of 2009, while this was still much slower than the 24.2% recorded in the first half of 2009. Personal loans rose 24% in the first six months to RMB 10.1 trillion at the end of June 2010, supported by strong growth in mortgage loans as a result of an active property market. Corporate loans, excluding discounted bills, grew 9.0% to RMB 34.9 trillion. The growth was mainly in medium- and long-term loans, and new loans were primarily granted to infrastructure, real estate and manufacturing industries. Discounted bills, on the other hand, have continued to fall since July 2009 and fell by 27% in the first half of 2010 to RMB 1.74 trillion at the end of June 2010.
The NPL ratio of the commercial banks improved to 1.30% at the end of June 2010, from 1.58% at the end of 2009, due to both loan growth as well as an 8.5% decline in gross NPLs over the first six months of the year. Credit card loan delinquencies also improved during the first half of 2010, with the six-month delinquency ratio falling to 2.5% at the end of June 2010, from 3.1% at the end of 2009. Commercial banks continued to set aside allowances for loan losses. The ratio of total allowances to NPLs reached 186% at the end of June 2010, up from 155% at the end of 2009.

 

MAINLAND CHINA LISTED BANKS' PERFORMANCE

 

Balance sheet

The listed mainland banks achieved balance sheet and loan growth of 10.4% and 11.1% over the first half of 2010 to reach RMB 59.7 trillion and RMB 31.2 trillion respectively. Corporate loans and personal loans grew by 12.7% and 19.1%. On the other hand, discounted bills fell 38% in the first six months, following a 22% drop in the second half of 2009.
The proportion of personal loans grew to 22.7% of total loans at the end of June 2010, up from 18.7% and 21.2% at the end of June 2009 and December 2009. Loan growth within personal loans was broad-based, with mortgages and credit cards growing 17.6% and 18.7% over the first half of 2010. Credit cards now account for about 0.9% of the total loans in mainland listed banks.
The statutory deposit reserves with the PBOC went up 20.4% over the first half of 2010 to match a 10.8% rise in customer deposits and a 1.5 percentage point increase in statutory deposit reserve ratios. The surplus deposit reserves with the PBOC rose 3.1%.
Customer deposits reached RMB 47.7 trillion at the end of June 2010. Savings deposits accounted for 51% of total deposits, similar to 51.5% at the end of 2009. The loan-to-deposit ratio calculated from consolidated accounts was 65.3% at the end of June 2010, similar to 65.1% at the end of 2009. Based on disclosed information, the statutory loan-to-deposit ratios for listed banks complied with the statutory ceiling of 75% at the end of June 2010.
The average CAR of all listed banks was 11.4% at the end of June 2010, similar to 11.5% at the end of 2009. Listed mainland banks have been active in raising funds in the first eight months of 2010 to support their balance sheet growth and to strengthen their capital base. The fund raisings announced so far have mainly been from shareholders (IPOs, rights issues and private placements) while a smaller portion of the funds have been raised through debt issuance (convertible bonds and subordinated debts). Based on announced plans, about RMB 400 billion was raised in the first eight months of the year through equity and debt, which included IPOs by two banks.

 

Profitability

The mainland listed banks posted strong first half results, with net profit after tax growing by 31% to RMB 346 billion, supported by balanced growth in net interest income and fee and commission income. Operating profit before loan impairment allowances grew by 28%.
Net interest income grew by 27% to RMB 656 billion on the back of loan growth and some improvement in the interest margin. Although benchmark interest rates have remained unchanged since the end of 2008, some banks began to charge higher spreads on top of the benchmark interest rates on new loans in the first half of 2010. Renminbi interbank rates have also gone up as liquidity tightened in May and June 2010. Based on disclosed information, the average annualised net interest margin rose to 2.36% in the first half of 2010, compared with 2.27% for the full year of 2009 and 2.25% for the first half of 2009.
Net fee and commission income rose 35% to RMB 150 billion. This was generally broad based with individual banks growing in different areas of the business.
Operating expenses rose 24% to RMB 313 billion, within which staff costs rose by 28% while business tax and surcharges, premises and equipment related expenses rose by 20% and 16% respectively. The cost to income ratio was 37.8% for the first half of 2010, which was slightly lower than the 38.5% for the same period last year.

 

Asset quality

Loan impairment charges rose by 10.4% to RMB 69 billion as net collective charges continued to build up, offset by write-back in net individual charges. Based on disclosed information, net collective charges rose by 33% over the same period last year partly due to loan growth. Net individual charges on the other hand saw an overall write-back.
The NPL coverage ratio, measured by total loan allowances to NPLs, reached 182.7% at the end of June 2010, up from 152.4% at the end of 2009. For small and medium-sized banks, the provision coverage ratio reached 239.1% at the end of June 2010, up from 203.1% at the end of 2009.
The NPL ratio continued to improve on the back of loan growth and lower gross NPLs, dropping to 1.28% at the end of June 2010 from 1.57% at the end of 2009. The decline in the NPL ratio was observed across all banks while the drop in gross NPLs was seen in most banks, with a few starting to see some uptick. Overall gross NPLs fell by 9.7% during the first half of 2010.

 

Commenting on the Hong Kong listed banks' results, Elie Lai, a partner in KPMG's Financial Services practice, said:

 

"Despite a sustained low interest regime, Hong Kong listed banks still saw an overall growth of 25% in net profit after tax to HKD 47.8 billion for the first half of 2010. Growth in net profit was driven more by lower loan impairment charges than growth in the core operating income. Net interest income fell by 1.5% on the back of narrowing margins although net fee and commission income rose by 21% from more active wealth management business and loan growth. Operating expenses grew by 8.8% on higher staff costs, rental and marketing expenses. As a result, the cost-to-income ratio went up to 45.4% for the first half of 2010, compared with 44.1% in the prior period. The performance of individual listed banks was mixed, with net profit after tax growing from a range of 0.2% to 85%. Looking ahead, net interest margins need to improve before we see sustained growth in core income. Cost control will also be important given rising staff and compliance costs in the industry.

 

Loan books remained healthy following economic recovery in the second half of 2009. Gross impaired loans fell by 4.7% in the first six months of 2010. The impaired loan ratio improved from 0.93% at the end of 2009 to 0.77% at the end of June 2010. A continual rise in property prices over the last one and a half years has raised concern and the HKMA has revised the mortgage lending policies to curb speculation in the residential property sector. Lenders should remain cautious of any potential bubble in the property sector."

 

On the recent expansion of renminbi business in Hong Kong, Martin Wardle, partner in charge of KPMG's Financial Services practice in Hong Kong, commented:

 

"The expansion of renminbi business in Hong Kong will certainly provide business opportunities for the banking sector. Given that the renminbi is not freely convertible and offshore renminbi business is still a new business and subject to various restrictions, there will be challenges ahead in understanding and managing the risks associated with renminbi transactions, in particular foreign exchange, operational and regulatory risks and also the impact on systems.

 

Regulations have also been tightened in the banking industry, following the Lehman-Brothers-related investment mis-selling allegations and data privacy issues relating to the transfer of customers' personal data for marketing purposes. Reputational risks should be at the top of the board's agenda and the importance of strong compliance and governance cannot be over-emphasised."

 

Commenting on the mainland listed banks' results, Joan Ho, partner in charge of KPMG's Financial Services practice in southern China, said:

 

"Mainland China listed banks achieved a 31% growth in net profit after tax to RMB 346 billion as the local economy continued to grow. Net interest income rose 27% to RMB 656 billion on the back of loan growth and a widening interest margin. While benchmark interest rates set by the PBOC have remained unchanged since the end of 2008, more banks began to charge a higher spread over benchmark lending rates in the first half of 2010. There was some tightening in interbank liquidity in May and June 2010 as the market was concerned about the European sovereign debt crisis and the regulatory review of loan-to-deposit ratios. Non-interest income also grew 23% to RMB 171 billion, thanks to a 35% growth in net fee and commission income.

 

The NPL ratio for mainland listed banks came down to 1.28% at the end of June 2010 from 1.57% six months ago. While the NPL ratio remained low, a few banks saw an uptick in their NPL balances. Special mention loans (SML), which require closer monitoring, accounted for 3.32% of total loans at the end of June 2010, down from 3.69% at the end of December 2009. A number of banks also saw an increase in gross SMLs though overall SMLs stayed at a similar level to last year. The banks continued to build up their loan allowances to match loan growth. The average loan allowances to NPLs reached 182.7% at the end of June 2010, up from 152.4% at the end of 2009. The average loan allowances to total loans ratio was 2.33% at the end of June 2010, with bigger banks reaching an average of 2.50%; and small and medium-sized banks reaching an average of 1.80%.

 

Strong loan growth of 11.1% over the first half of 2010 continued to post challenges for credit risk management as well as compliance issues. Based on the results announcements, mainland listed banks complied with the statutory limit of 75% on the loan-to-deposit ratio, though the majority exceeded 70%. Banks have been monitoring credit to industries with excess capacity, government financing vehicles as well as to the real estate sector. Stress tests have also been performed on loan portfolios. Credit tightening will remain challenging but this is critical to minimise credit losses and conserve capital. Effective monitoring of the use of funds and project progress will remain important to flag potential problem loans. Looking ahead, slow US and European growth, trade frictions, as well as the end of the government stimulus plan may affect domestic economic growth in the second half of 2010."

 

Ivan Li, a partner in KPMG's Financial Services practice in Shenzhen, commented:

 

"Fund raising continued to be active in 2010 across listed banks, with Agricultural Bank of China (ABC) and China Everbright Bank launching their IPOs in mid-2010. ABC's IPO, which raised USD 22.1 billion in its dual listing on the Shanghai and Hong Kong stock exchanges, was the world's biggest IPO. Fund raising in 2010 were mainly from shareholders, with a smaller portion of funds raised from debt issuance. A handful of rights issues and private placements plans are pending shareholder and/or regulatory approvals to raise funds in the remainder of the year. Based on fund raising plans announced in the beginning of 2010, total equity and debt raised and to be raised by listed banks exceeds RMB 720 billion, of which about RMB 400 billion was raised in the first eight months of the year. New funds will help the banks strengthen their capital base and support business expansion The average CAR of listed banks was still strong at 11.4% at the end of June 2010, similar to 11.5% at the end of 2009."

 

 

- Ends -

 


 

1, The 13 Hong Kong banks included in our analysis are BOC Hong Kong (Holdings), The Bank of East Asia, CITIC Bank International, Chong Hing Bank, Dah Sing Banking Group, Fubon Bank (Hong Kong), Hang Seng Bank, Hongkong and Shanghai Banking Corporation, ICBC (Asia), Public Financial Holdings, Standard Chartered Bank (Hong Kong), Wing Hang Bank and Wing Lung Bank.

2, Disclosed information refers to results announcements and media reports.

3. The 16 mainland banks included in our analysis are: Agricultural Bank of China, Bank of China, China Construction Bank, Bank of Communications, China CITIC Bank, China Merchants Bank, China Minsheng Banking and Industrial & Commercial Bank of China which are listed in both Shanghai and Hong Kong stock exchanges, and also Bank of Beijing, Bank of Nanjing, Bank of Ningbo, China Everbright bank, Huaxia Bank, Industrial Bank, Shanghai Pudong Development Bank, and Shenzhen Development Bank which are listed in the Shanghai stock exchange.

Growth analysis was calculated based on the results of those banks which have provided comparative figures.

 

About KPMG

 

KPMG is a global network of professional firms providing Audit, Tax and Advisory services. We operate in 146 countries and have 140,000 people working in member firms around the world.

 

The independent member firms of the KPMG network are affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. Each KPMG firm is a legally distinct and separate entity and describes itself as such.

 

KPMG China has 12 offices (including KPMG Advisory (China) Limited) in Beijing, Shenyang, Qingdao, Shanghai, Nanjing, Chengdu, Hangzhou, Guangzhou, Fuzhou, Shenzhen, Hong Kong and Macau, with more than 9,000 professionals.

 

For any further enquiries, please contact the following banking specialists at KPMG:

Martin Wardle

Partner in charge, Financial Services practice in Hong Kong

Via Telephone +852 2826 7132

Via Email martin.wardle@kpmg.com

 

Joan Ho

Partner, partner in charge, Financial Services practice in southern China

Via Telephone +852 2826 7104

Via Email joan.ho@kpmg.com

 

Ivan Li

Partner, Financial Services practice in Shenzhen

Via Telephone +86 (755) 2547 1218

Via Email ivan.li@kpmg.com

 

Elie Lai

Partner, Financial Services practice in Hong Kong

Via Telephone +852 2978 8168

Via Email elie.lai@kpmg.com

 

For media enquiries, please contact:

Nina Mehra

Senior Manager, Media Relations

KPMG China

 +852 2140 2824 (Direct)

   +852 9724 6092 (Mobile)

 nina.mehra@kpmg.com