Fitch: Challenges lie ahead for Chinese banks
Fitch Ratings said in a special report published today that while 2007 was a splendid year for the majority of Chinese banks under its coverage, earnings growth is expected to moderate in 2008 due to the central bank’s tightened monetary stance and the correction currently underway in the equity market, which will stunt the growth of fee income.
Nevertheless, the agency said it expects sectoral performance will remain broadly positive this year absent a dramatic turn in the economic cycle.
“Accelerated loan growth, expanded fee income from the sale of wealth management products, and low NPLs contributed to record-level earnings in 2007,” said Charlene Chu, Senior Director with Fitch’s Financial Institutions team in Beijing, in a report entitled “Chinese Banks - Annual Review and Outlook”. “The strong upturn in profitability in 2007 was one of the most positive developments in the Chinese banking sector in recent years as it puts banks on the path to long-term self-sufficiency,” she added. — www.theasianbanker.com (January 31 2008)–