Financial Industry 07 (Jul 18 - Dec 24)

[winston]

China’s Big Six banks meet first-quarter profit forecasts, but Covid-led slowdown poses higher bad loan risks

Leading state-owned Chinese banks report first-quarter profit growth in line with expectations

Postal Savings Bank of China beat estimates, posting 18 per cent profit growth

by Georgina Lee

Source: SCMP

https://www.scmp.com/economy/article/31 ... d-slowdown

[winston]

China Banks: These Stocks Are Getting Closer to a Bottom

by Chris Igou

Global X MSCI China Financials Fund (CHIX)

Source: DailyWealth.com

https://dailytradealert.com/2022/05/17/ ... -a-bottom/

[behappyalways]

Banks Face Trouble As Credit Cycle Turns
https://www.zerohedge.com/markets/banks ... ycle-turns

[winston]

Chinese Banks Overflow With Cash That Nobody Wants to Borrow

Source: Bloomberg

https://finance.yahoo.com/news/chinese- ... 00962.html

[behappyalways]

Credit Suisse Plunges After Warning Of Q2 Loss, Sees New Round Of Job Cuts
https://www.zerohedge.com/markets/credi ... d-job-cuts

[winston]

vested XLF

Wells Fargo Stock Leads Bank Gains As Fed Stress Tests Boost Dividend Bets

The Fed's clean bill of health will allow the biggest U.S. banks to boost dividends and share buybacks over the coming year.

by MARTIN BACCARDAX

The Federal Reserve said that all of the nation's largest banks could weather a severe shock to the U.S. economy in an assessment that will allow them to boost shareholder returns over the coming year.

"This year's hypothetical scenario is tougher than the 2021 test, by design, and includes a severe global recession with substantial stress in commercial real estate and corporate debt markets."

Source: The Street

https://www.thestreet.com/markets/wells ... end%2BBets

[behappyalways]

All 33 Banks Pass Fed Stress-Test, Setting Stage For Billions In Buyback
https://www.zerohedge.com/markets/all-3 ... s-buybacks

[winston]

Big U.S. banks' second quarter profits to tumble on higher bad loan reserves

by David Henry

Analysts expect JPMorgan Chase & Co will report a 25% drop in profit on Thursday, while Citigroup Inc and Wells Fargo & Co will show 38% and 42% profit declines, respectively on Friday.

Bank of America Corp, which like its peers has big consumer and business lending franchises, is expected to show a 29% drop in profit when it reports on July 18.

JPMorgan, Citi, Wells Fargo and Bank of America, the country's largest four lenders, could record $3.5 billion of loss provisions compared with $6.2 billion of benefits last year when they released reserves.

Morgan Stanley, the sixth-biggest U.S. bank by assets, is expected to show a 17% decline in profits.

The fifth-biggest bank, Goldman Sachs Group Inc., is expected to report a 51% profit drop when it reports on July 18.

Source: Reuters

https://finance.yahoo.com/news/big-u-ba ... 15531.html

[winston]

UBS: If All Payment-halted Mortgages Become NPLs, CN Banks' Profit This Yr To Fall 13.3%

UBS cited the Chinese media that homeowners of over 80 unfinished projects across several cities in China suspended their mortgage payments.

In its report, the broker estimated that the suspended projects may make up 10% of total residential property sales in China in 2021 and 5M22, assuming the involved mortgages were 40% of the housing prices, under base case.

If all the payment-halted mortgages were converted as NPLs, i.e. RMB741 billion in base case, Chinese banks' NPL ratio and NPL coverage ratio would drop 43 bps and 40.7 ppts to 2.12% and 160%.

Related News - Daiwa: CN Homeowners' Refusal to Make Mortgage Payments Only Affects CN Banks' Near-term Profitability in Extreme Case

Besides, assuming 50% loss ratio, the incremental credit cost from RMB741 billion new NPL formation would cause RMB411 billion less PBT and RMB308 billion less PAT in the banking sector, equivalent to 13.3% of the bank system's total profits in 2022E.

After conducting the stress test, the broker listed the Chinese banks with greater exposure to defaulted and high-risk Chinese developers. Such banks included MINSHENG BANK (01988.HK), ABC, ICBC (01398.HK) and CM BANK (03968.HK).

Source: AAStocks Financial News

[winston]

M Stanley: CN Banks' Exposure to Mortgage Payment Refusal Smaller than Expected; Overall Risk Manageable

Chinese homebuyers collectively refused to repay mortgages on delayed project deliveries recently, Morgan Stanley mentioned in its report.

Chinese banks covered by the broker had better-than-expected risk exposure to mortgage suspension.

Among which, overdue loans only made up of a tiny proportion of the total mortgages.

As such, the broker deemed the overall risk is still manageable despite expectation on further deterioration of the incident.

Large SOE banks, such as ABC (01288.HK), ICBC (01398.HK) and BANKCOMM (03328.HK), stated one after another that the overdue loans from projects involving mortgage suspension accounted for less than 0.01% of their total mortgage balance.

Meanwhile, CM BANK (03968.HK and Ping An Bank also announced merely RMB12 million and RMB31.8 million overdue mortgages affected by the suspension, which were way below the street consensus.

Related News: JPM Drops CM BANK (03968.HK) TP to $80, Rating Overweight

Source: AAStocks Financial News