Friday, April 27, 2012

China's Four Large Banks "Suffering" Slowdown

China's Big Four banks hit by slowdown, costs
Regulators have also closed in on the banks' freewheeling practice of charging fees and commissions, after the volume of complaints from customers and politicians grew louder in the last year. Industrial and Commercial Bank of China Ltd <1398.HK>, the world's biggest bank by market value, reported on Friday a slower 14 percent rise in first-quarter profit, hit by weaker-than-expected fee and commission income.
Only a 14% rise in profit. Tells you how much growth is built into assumptions.
The sheer size that China's banks have grown to is astonishing, when factoring in that the Big Four - Bank of China, ICBC, China Construction Bank and Agricultural Bank of China - were technically insolvent institutions less than a decade ago.
If analysts like Chanos are correct, they are still insolvent, just an accounting mirage makes them otherwise.
ICBC's market capitalization of $240 billion is slightly less than the combined value of Goldman Sachs <GS.N>, Morgan Stanley <MS.N>, Citigroup <C.N> and Bank of America <BAC.N>. ICBC's 2011 net profit alone is nearly equal to Morgan Stanley's entire market worth.
Forget too big to fail. How about too big to bailout?
And in a sign that Beijing is loosening policy reins to support the economy, Chinese banks lent a whopping 1.01 trillion yuan in March in their biggest lending surge in 14 months as the government relaxed credit restrictions.
That will keep the party going for while.

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