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Monday, July 2, 2012, 4:15 AM Chinese banks accounted for almost a third of global bank profit last year, up from just 4% in 2007. Much of the gains came at the expense of European peers who bled marketshare. Leading the profit tables: ICBC with pretax earnings of $43.2B, China Construction Bank with $34.8B, and Bank of China with $26.8B. JPMorgan (JPM) and HSBC (HBC) took fourth and fifth place. 1 Comment [Global & FX, Financials]
Wednesday, June 13, 2012, 9:55 AM Last week's PBOC rate cut looks like a step to ending Chinese banks' comfy 3-6-3 arrangement (borrow at 3%, lend at 6%, golf course by 3). A major step towards a market-oriented interest rate regime, the central bank now allows lenders to offer up to a 20% discount from the state-mandated rate, a move expected to shave cushy profit margins. Comment! [Financials, Global & FX]
Wednesday, May 9, 2012, 2:46 PM The Fed approves the first-ever Chinese purchase of a U.S. bank, giving the green light to ICBC's (IDCBF.PK) purchase of 80% of Bank of East Asia. The Fed also approves applications by the Bank of China (BACHY.PK) to establish a branch in Chicago and Ag Bank of China to open a branch in NYC. 5 Comments [Global & FX, Financials]
Wednesday, May 2, 2012, 10:03 AM Singapore's sovereign wealth fund - Temasek Holdings - fixes to sell up to $2.5B of its stakes in Bank of China (BACHY.PK) and China Construction Bank, taking advantage of big moves higher in both stocks over the past few months. Bank of China dives 3.6% on the news. Comment! [Global & FX, Financials]
Thursday, April 12, 2012, 8:45 AM Jim Chanos brushes off chatter about the large Chinese banks being broken up, calling them "arms of state policy. They loan because the local party official ... tells them we need a new stadium ... I really doubt the party is going to give up a lever of power." (Chanos earlier on "the party.") Comment! [Global & FX, Financials]
Thursday, April 5, 2012, 11:10 AM "China's banks (aren't) really the villains here," writes Patrick Chovanec, responding to Premier Wen's comments about their monopoly power. "They are creatures of the State; they do what they are told and incentivized to do," - that is lend, without counting the cost, for projects that "carry the imprimatur (and implicit guarantee) of the Mother State." 1 Comment [Global & FX, Financials]
Wednesday, April 4, 2012, 7:54 AM "The Chinese government has said similar things for many, many years," without following up with action, says Victor Shih, reacting to yesterday's comments from Premier Wen about breaking up the big bank cartel (there, not here) and liberalizing the financial sector. Comment! [Global & FX, Financials]
Tuesday, April 3, 2012, 12:21 PM China's large banks are able to make profits "too easily," says Premier Wen Jiabao, calling for the monopoly posed by the country's giant lenders to be broken. Comment! [Global & FX, Financials]
Wednesday, March 21, 2012, 9:31 AM China's biggest banks are expected to post solid profits when they report Q4 income later this month, but will also higher non-performing loans for the first time in 3 years. "It's the beginning of a worrisome trend," says an analyst urging investors to cash in profits following a 42% rise in bank shares over the last 5 months. Comment! [Global & FX, Financials]
Tuesday, February 21, 2012, 8:03 AM "The notion that Chinese banks have 1% non-performing loans is patently ridiculous," writes Patrick Chovanec of the record annual profits posted by the lenders. "That provisions for 2.5X this amount are somehow 'generous' are equally absurd." Based on the banks' valuations - Industrial Bank (IDCBF.PK) trades at a PE of 6 - investors don't buy it either. Comment! [Global & FX, Financials]
Wednesday, October 12, 2011, 3:31 PM Late to the party, but still of interest, Sanjay Jain of Credit Suisse is bearish on Chinese banks, figuring their non-performing loans may rise to 8-12% in coming years - completely eradicating their equity. While the banks may look attractive at current P/B ratios, Jain thinks 2012 earnings could be wiped out, making the "cheap" valuation not so. Comment! [Global & FX, Financials]
Tuesday, October 11, 2011, 11:30 AM "The government stepping in to shore up the banks, when two months ago people thought there was nothing wrong with the Chinese banks, should tell you just how seriously this situation is deteriorating,” says Jim Chanos. "The property market is what investors ought to be watching ... (and it's in the) first parts of a very serious pullback." 2 Comments [Global & FX, Financials]
Tuesday, October 11, 2011, 10:16 AM Patrick Chovanec sees China's buying of bank shares as a "head fake," a preemptive move to stop a crash and make it easier for the lenders to raise capital. He quotes Vitaliy Katsenelson: "China's SWF is not Warren Buffett... when he's buying BRK.A, he actually thinks it's undervalued. China (is) just trying to create confidence." Comment! [Global & FX, Financials]
Tuesday, October 11, 2011, 9:46 AM Chinese bank stocks sky after Huijin Investments - an arm of China's SWF - buys $31M worth of shares in the 4 major lenders. Huijin is already controlling shareholder of those banks, so its move is not totally unlike Berkshire Hathaway stepping into the market to buy up stock in BRK.A. Comment! [Global & FX, Financials, On the Move]
Monday, October 10, 2011, 8:15 AM Of the Chinese bank stock buys, the folks at beyondbrics note the last time China stepped in to buy the lenders was September 2008 - the stock market bottomed shortly afterwards. Off 28% this year, a popular China ETF, FXI is +2.3% premarket. Comment! [Global & FX, Financials, Quick Ideas]
Tuesday, September 20, 2011, 3:06 PM Reports that 85% of local government borrowers in Liaoning missed loan payments in 2010 ought to raise the eyebrows of those who think Chinese banks are cheap. Chinese lenders aren't as nearly as well-capitalized as Tier 1 ratios would indicate, and owners are likely to face dividend cuts, dilution, or both. China financial ETF: CHIX -24% YTD. 2 Comments [Global & FX, Financials]

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