China banks poised for profit as combined net income to rise 8% in 2018

A recovering domestic economy is boosting loan demand.

Bloomberg reports that Chinese big banks are poised to rebound from a lacklustre year with the combined net income of top 5 banks set to surge 8.1% in 2018 as the recovering economy is set to significantly boost loan demand. 

The Top 5 - AgBank, ICBC, China Construction Bank, Bank of China and Bank of Communications - control more than a third of the country’s $40t in banking assets.

The move by regulator China Banking Regulatory Commission to lower bad-loan provisions from 150% to 120% also boosts growth prospects since this frees up more cash for credit purposes.

"We are upbeat on rerating at banks," analysts at China International Capital Corp., led by Victor Wang, wrote in a note. "Earnings should improve as economic growth stabilises."

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