Margin pressure at China’s major banks may ease as economic SOS wanes
The largest banks in China may see easing pressure on their net interest margins, after they stayed in contraction in the first quarter, as lenders may extend fewer loans at the cheapest interest rates.
In the three months ended March 31, Industrial & Commercial Bank of China Ltd., China Construction Bank Corp., Bank of China Ltd. and Agricultural Bank of China Ltd. reported lower net interest margins compared with a year ago. Apart from Agricultural Bank of China, which did not disclose its NIM for the fourth quarter of 2020, three other state-backed lenders also reported a quarter-over-quarter contraction in their margins.
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6 May, 2021 Author Jiayue HuangRehan Ahmad
The largest banks in China may see easing pressure on their net interest margins, after they stayed in contraction in the first quarter, as lenders may extend fewer loans at the cheapest interest rates.
In the three months ended March 31, Industrial & Commercial Bank of China Ltd., China Construction Bank Corp., Bank of China Ltd. and Agricultural Bank of China Ltd. reported lower net interest margins compared with a year ago. Apart from Agricultural Bank of China, which did not disclose its NIM for the fourth quarter of 2020, three other state-backed lenders also reported a quarter-over-quarter contraction in their margins.
Singapore Panel Proposes Shift Away From Libor by End-April (1)
The Southeast Asian financial center still faces challenges in the transition to a Libor alternative, given the limited historical use of the domestic interbank funding market, said Philip McNicholas, Asean FX and rates strategist at Bloomberg Intelligence.
However, as SORA is based on an average of past overnight lending rates, it may bolster the interbank lending market depth and liquidity, producing better and more efficient price discovery.
A spokesperson for the Association of Banks in Singapore said that the banks represented in the steering committee subgroups on business/syndicated loans and consumer products are on track to meet the timelines.