Agricultural Bank Bests Bank Of China On Earnings

Date:2011-10-27houhaizhen  Text Size:

October 27 -- Agricultural Bank of China (ABC) (601288.SH, 1288.HK) posted a 43.59 percent year-on-year increase in net profit for the first three quarters to 100.8 billion yuan, beating the 96.3 billion yuan recorded by Bank of China (601988, 3988.HK) during the same period, and exceeding the 94.9 billion yuan earned by ABC for full year 2010, reports yicai.com, citing a company filing. Basic earnings per share hit 0.31 yuan.

During the same period, ABC recorded annualized average return on total assets of 1.23 percent, up 0.24 percentage point year-on-year, while the annualized weighted average return on net assets hit 23 percent.

The balance of non-performing loans (NPL) as of end September hit 87.96 billion yuan, down 12.45 billion yuan from end 2010. The NPL ratio fell 0.43 percentage point from end 2010 to 1.6 percent.

The provision coverage ratio rose 69.84 percentage points from end 2010 to 237.89 percent.

Agricultural Bank of China, one of China’s big four state-owned banks, had posted earnings growth rates of more than 40 percent since its initial public offering in mid-2010.

Compared to the earnings growth of 21.52 percent recorded by Bank of China during the first three quarters, ABC posted a growth rate of 43.59 percent, and became the third-largest state-owned bank by earnings and scale.

The bank attributed the stellar performance to the rapid increases in net interest income and revenue from commissions and fees.

For the first three quarters, ABC posted a 28.35 percent year-on-year increase in net interest income to 223.4 billion yuan, while commission and fee charges generated revenue of 54.8 billion yuan, up 61.1 percent.

The 61.1 percent growth in commission and fee income outpaced the average industry growth of 43.59 percent.

The bank’s total assets hit 11.6 trillion yuan through the end of September, up 1.3 trillion yuan from end 2010. Total liabilities were up 11.98 percent from the end of 2010 to 11 trillion yuan.

ABC's balance of loans and payment advances as of end September hit 5.49 trillion yuan, while the balance of deposits totaled 9.7 trillion yuan, with a loan-deposit ratio of 56.55 percent.

For the first three quarters, the bank extended 530.7 billion yuan of new loans, and obtained 815.9 billion yuan of new deposits.

According to the report, ABC traditionally has a good loan-deposit ratio among the listed banks due to the wide coverage of its network.

ABC has the greatest number of outlets among the listed banks, and has the widest coverage across China, leading to an enhanced ability to attract deposits, according to Founder Securities.

Benefiting from a large source of deposits, the bank could thus capitalize on relatively low costs of capital, and the net interest margin hit 2.69 percent during the first nine months, according to the report.

Agricultural Bank of China reported capital adequacy ratio of 11.85 percent through the end of September, up 0.26 percentage point from the end of last year. During the same period, core capital adequacy ratio hit 9.36 percent, down 0.39 percentage point.

The bank had issued 50 billion yuan worth of subordinated bonds in June, driving up the capital adequacy ratio.

Shares of ABC were up 0.75 percent to trade at HK$2.67 per share at 10:11 today.

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