Bank of China profit disappoints, signals rough quarter for peers
(Reuters) - Bank of China (601988.SS: Quote), the country's No.3 lender by market value, posted on Thursday a near 10 percent rise in first-quarter net profit but the figure fell below expectations as flat net interest margins offset a rise in fee income.
Bank of China (3988.HK: Quote) is the first of China's four largest banks to report earnings for the quarter which still showed the effects of Beijing's earlier policy-tightening moves to engineer a soft-landing for the economy.
China's annual rate of GDP growth slowed to 8.1 percent in the first three months of 2012, down from Q4 2011's 8.9 percent.
The results could foreshadow similarly underwhelming numbers when the three remaining major banks report their results on Friday.
Bank of China is also the first 'Big Four' bank to report after premier Wen Jiabao's comments in early April that the country's state banks act as a monopoly that make money "far too easily".
Bank of China, the country's biggest foreign exchange bank, said it made a net profit of 36.8 billion yuan ($5.83 billion) compared with the 33.4 billion yuan profit in the first quarter a year ago. That was below the 38.9 billion yuan average estimate of four analysts polled by Reuters.
Net fee and commission income amounted to 21.2 billion yuan, an increase of 13.8 percent. That figure, however, did not make up for the lack of growth in other key metrics.
"It was a bit of a disappointment in terms of net interest margin," said Mike Werner, senior analyst at Bernstein Research, who covers Chinese banks.
Werner expected a Bank of China profit of 37.2 billion yuan, with his consensus figures showing a 37.3 billion yuan target. Werner pointed out that the flat net interest margin of 2.11 percent was a surprise, as he thought Bank of China and others would report an improvement. Continued...