WRAPUP 1-Slowing savings growth weighs on Chinese bank earnings
* ICBC Q1 net profit 68.7 bln yuan vs 66.1 bln yuan view
* AgBank Q1 net profit 47 bln yuan vs 46.4 bln yuan view
* CCB Q1 net profit 59.6 bln yuan vs 55.2 bln yuan view
* Loan growth outpacing deposit growth, pressuring margins
By Kelvin Soh
HONG KONG, April 26 (Reuters) - Weak deposit growth weighed on China's banks in the first quarter, forcing lenders including the Industrial and Commercial Bank of China Ltd to pay more for savers' money and eating into their margins.
ICBC, the world's biggest bank by market value, saw money leaving its doors at a faster rate than it came in. Deposits rose 4.5 percent while loans rose 5.2 percent, the bank said in a statement to the Hong Kong bourse.
Smaller rival Agricultural Bank of China Ltd reported similar numbers, with its loan book growing about 10 percent faster than its deposit base.
"There's been growing competition among banks for savers who are able to deposit large amounts of money, so that's pushed up savings rates," said Chen Xingyu, a director at Phillip Securities in Shanghai. "That means margins will likely narrow this year."
AgBank's net interest margin narrowed to 2.78 percent from 2.81 percent at the end of last year, while China Construction Bank Corp (CCB) saw a fall to 2.71 percent from 2.75 percent.
ICBC did not release its net interest margin numbers, but the bank said in late March that its margins would come under pressure in the first half of this year.
The slowdown in deposit growth comes as a growing portion of retail savings flows into higher-risk Chinese investment tools - known locally as wealth management products - with the pace picking up since late 2012, Fitch Ratings said on Friday.
EARNINGS MOSTLY BEAT FORECASTS
Much of the banks' deposit growth in 2012 had been driven by the growing popularity of wealth management products. However, China's banking regulators said they had increased regulation of those products, hampering their growth this year.
"We will increase regulation on the structure and sales of wealth management products and keep monitoring where the money is channelled," the China Banking Regulatory Commission said in a statement on its website on Wednesday.
The banks do not release wealth management product numbers on a quarterly basis. However, ICBC said late in March that it issued more than 1 trillion yuan ($162 billion) worth of such products in 2012, helping to boost new deposits by 1.2 trillion yuan.
The three Chinese banks that announced their earnings on Friday - ICBC, CCB and AgBank - largely beat analysts' expectations, as a rise in their fee and commission income helped to offset their weakening margins.
ICBC said it made a net profit of 68.7 billion yuan in January-March, beating expectations for 66.1 billion yuan and up 19.4 percent from a year earlier.
AgBank said its net profit for the period was 47 billion yuan, also slightly beating expectations for 46.4 billion yuan and up 22 percent.
CCB said its first-quarter net profit clocked in at 59.6 billion yuan, beating expectations for 55.2 billion yuan and up 16 percent from a year ago. The expectations are from a Reuters poll of six analysts.
The jump reflects a weak performance in 2012, when most banks' fee and commission income was largely flat as authorities tightened rules in response to criticism of indiscriminate charging for services that are usually free in other markets, such as changing an internet banking password.
"The banks are saying that fee growth is largely driven by their investment banking and credit cards," said Timothy Li, an analyst at Core Pacific-Yamaichi in Hong Kong. "The growth rate will slow, but double digits should still be achievable." ($1 = 6.1707 Chinese yuan) (Editing by Edmund Klamann)
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