Agricultural Bank of China, the country’s third-largest bank, has reported its first annual fall in quarterly profit in three years as bad loans rose by the most on record, the Financial Times reported Wednesday.
Analysts say the weaker than expected profit reflects rising defaults amid a slowdown in economic growth.
AgBank said Tuesday night that net income fell 5 per cent in the last three months of 2014, the first annual decline in quarterly earnings since 2011.
“I expect this will be the industry trend this year,” Zou Hengchao, bank analyst at Minsheng Securities in Shanghai, told the newspaper.
“Bad loans will rise everywhere. The bad economy is the main reason.”
AgBank’s non-performing loans rose by 21.5 billion yuan (US$3.5 billion), the biggest quarterly rise since the lender began disclosing quarterly figures before its 2010 initial public offering.
The bank’s NPL ratio rose to 1.54 per cent at the end of last year from 1.29 per cent three months earlier, also a record increase.
The official NPL ratio for China’s entire banking system was 1.29 per cent at the end of last year, the highest in more than four years.
“Previously, bad loans were concentrated in the Yangtze River Delta, but now they are spreading to the central and western regions,” Zou said.
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