Chinese banking profits 'will decelerate next year'

20 December 2012

Banks in China are likely to experience significantly slower profit growth next year as a combination of domestic and external factors affect the nation's financial sector.

That is according to a new report conducted by the Bank of Communications (BoC), which has predicted that net profit expansion will decelerate to between seven and eight per cent in 2013 as operating conditions continue to get tougher.

This represents a markedly lower profit growth level than the 17 per cent financiers are expected to enjoy this year and the BoC indicated that issues in monetary control, the real economy and the fact more lenders are likely to rely on bond financing will weigh performance down.

Overall, the credit environment in China is expected to be fairly modest without being too loose, while the BoC also indicated that commercial banks will keep their lending practices subdued because significant cuts in the nation's reserve requirement ratio are likely.

By Claire Archer

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