Ping An Bank's First-Half Profit Slows as Lender Put Aside USD3 Billion to Cover Bad Loans
Yicai Global
/SOURCE : Yicai
Ping An Bank's First-Half Profit Slows as Lender Put Aside USD3 Billion to Cover Bad Loans

(Yicai Global) Aug. 12 -- Ping An Bank Co.'s [SZE:000001] profit growth more than halved in the first half compared with a year earlier, gaining 6.1 percent as the lender made provision for bad loans.

Net profit was almost CNY12.3 billion (USD1.85 billion) in the six months through June after the bank set aside CNY20 billion to cover non-performing loans, the Shenzhen-based company said in a statement yesterday. Profit jumped 15 percent in the year-earlier period.

Ping An Bank's NPL ratio rose 0.11 percentage points to 1.56 percent at the end of June, reaching a total CNY21.195 billion.

Dud loans among commercial banks rose to 1.81 percent of total lending at the end of the second quarter, the China Banking Regulatory Commission said last month. That was the highest ratio since the global financial crisis in 2009. Impaired loans at the country's lenders have been mounting amid high levels of corporate leverage. China's corporate debts have significantly exceeded the world average at 145 percent of gross domestic product as the world's second-largest economy has slowed.

Some private small- and mid-sized firms as well as low-end manufacturers have suffered a shortage of capital, broken capital chains and defaults because of poor management, falling profits and financing difficulties, the bank said. As a result, its bad loans ratio has risen. Ping An Bank is responding by making loans available to new enterprises while restricting those to companies in industries with overcapacity.

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