* NPLs remain low due to fresh money from inland areas
* ICBC, CCB, AgBank's NPL ratios fell last year
* China's "Big Four" post smallest profit growth since going
HONG KONG, March 27 China's top banks, led by
Industrial and Commercial Bank of China Ltd (ICBC),
reported benign bad-loan ratios as brisk lending in fast-growing
inland regions countered souring loans to overheated sectors on
the country's eastern coast.
A cooling Chinese economy has raised expectations of a spike
in bad loans, mainly stemming from a massive 4-trillion-yuan
($644.02 billion) government stimulus programme during the
global financial crisis that led to overinvestment in the real
estate and infrastructure industries.
Yet all of the so-called "Big Four" banks - including China
Construction Bank Corp (CCB), Agricultural Bank of
China Ltd (AgBank) and Bank of China Ltd (BOC)
- posted bad loan ratios that were mostly flat or down
in their 2012 earnings statements.
"I get a lot of pushback for saying this, but there will not
be a banking crisis in China," said Jim Antos, an analyst at
Mizuho Securities in Hong Kong. "I've seen many debt crises in
my career, and this is not one of them."
ICBC, the world's biggest bank by market value, said on
Wednesday that its non-performing loan (NPL) ratio slipped to
0.85 percent at end-2012 from 0.94 percent the previous year.
CCB and AgBank said earlier that their NPL ratios fell 1 basis
point, while BOC's rose just 1 basis point.
"Bad loans are very concentrated in a few areas, mainly in
the manufacturing and export sectors," said CCB's Chief Risk
Officer Huang Zhiliang. "Those are both industries most heavily
reliant on the external economy. When things stabilise, bad
loans will stabilise too."
Bad loans have mostly been concentrated in the Yangtze River
Delta, which includes Shanghai and the export-oriented city of
Wenzhou, according to the banks.
CCB, which has the highest exposure to the real estate
sector among the four lenders, saw impairment losses more than
double to 18 billion yuan in the Yangtze River Delta last year.
Sanford Bernstein analyst Mike Werner said the overall NPL
ratio had not yet increased as many of China's inland provinces
were still growing quickly, helping to offset the rising tide of
bad loans in the overheated coastal regions.
"Although China's GDP has slowed, we don't expect NPLs to
rise for at least two years," Werner said.
Strong deposit growth also helped cushion the effects of two
central bank rate cuts last year.
At ICBC, deposits increased more than 10 percent, mirroring
similar gains at the other lenders, helped by sales of
short-term wealth management products that are automatically
converted to cash and deposited into investors' regular
ICBC said it issued more than 500 new wealth management
products in 2012 with a total value exceeding 1 trillion yuan,
helping to boost new deposits by 1.2 trillion yuan.
Wealth management products have taken off in the past five
years as Chinese investors look for investment choices other
than real estate or the country's roller-coaster stock markets.
Net profit at ICBC grew 14.5 percent last year, the bank
said on Wednesday after the Hong Kong market close, beating
But the earnings growth was the slowest since the global
financial crisis as the Chinese economy lost momentum.
That was in line with its three smaller rivals, all of which
also reported their worst earnings growth since going public.
"There will be some pressure on our margins up to June this
year, especially in the first quarter," said ICBC President Yang
Kaisheng, adding that the bank's net interest margin fell 4
basis points in January-February from end-December.
ICBC's Hong Kong-listed shares are down about 1 percent so
far this year, matching a similar decline on the benchmark Hang
($1 = 6.2110 Chinese yuan)
(Reporting by Kelvin Soh; Editing by Ryan Woo)