Chinese banks, the nouveau riche of global banking, reported better-than-expected earnings in the last quarter, even beating the performance of foreign peers.
However, analysts caution that the profit bonanza will begin to abate as China speeds up the deregulation of interest rates.
"The push toward financial liberalization has been subtly but decisively redefining the operating landscape and could undermine banks' net interest margins," Standard & Poor's said in its latest banking report. The sector's profitability could drop up to 10 basis points this year, the ratings agency said.
"Interest margins will not be fully affected until all loans are re-priced," S&P said. "The full impact of lending rate cuts will take hold in 2013. At the same time, a margin squeeze from the relaxation of the lending rate floor and deposit rate ceiling will also hit home."
China's "Big Five" banks - the Industrial and Commercial Bank of China, China Construction Bank, Agricultural Bank of China, Bank of China and the Bank of Communications - reported an aggregate net profit of 202 billion yuan (US$32 billion) in the three months ended September 30. That was a 14.3 percent increase from the same period a year earlier.
In the third quarter, the "Big Five" earned 2.2 billion yuan a day, while their foreign peers - JP Morgan Chase, Wells Fargo, HSBC, Mitsubishi UFJ and Citigroup, the most profitable non-Chinese banks ranked by The Banker - made about 60 percent of that amount, according to calculation based on their quarterly results.
Industrial and Commercial Bank of China (ICBC), China Construction Bank and the Bank of China were the best money-spinners among the top 1,000 banks in the world, according to The Banker, a British magazine.
ICBC, the most profitable bank in the world, said its net interest margin improved in the third quarter but disclosed no figure. The margin was 2.66 percent at the end of June according to an earlier report.
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