Drop in AgBank's Q4 net is a first


AGRICULTURAL Bank of China Ltd, the nation's third-largest lender, yesterday unexpectedly posted its first drop in quarterly profit since its listing two years ago due to lending restrictions and higher costs tied to bad loans.

Net income declined 14 percent to 21.2 billion yuan (US$3.4 billion) for the fourth quarter, from 24.7 billion yuan, according to Bloomberg News calculations based on full-year figures reported by the Beijing-based lender. That fell short of the 28.84 billion yuan average estimate of 20 analysts in a Bloomberg News survey.

China's economic growth cooled last year as the central bank tightened lending and the government extended property curbs including higher mortgage rates and home-purchase restraints. The slowdown has continued into this year, with factory output in the first two months rising the least since 2009, while home prices posted the worst performance in a year.

"The first quarter will be the trough for the economy and banks face a real test on their risk-management capability," said Xie Jiyong, a Shanghai-based analyst at Capital Securities Corp. "Agricultural Bank, given its relatively weaker fundamentals compared with its bigger rivals, still has a lot to learn and improve."

Shares of AgBank have gained 5.4 percent in Hong Kong this year, the second-worst performer among the nine mainland banks listed in the city. The Hang Seng Finance Index rose 13.8 percent during the period. The results were released after the market closed.

The People's Bank of China yesterday moved to expand rural credit by cutting reserve requirements for 379 branches of the bank, expanding an earlier trial and freeing up a total of 23 billion yuan for lending.

AgBank had 5.63 trillion yuan of loans outstanding at the end of December, an increase of 14 percent from the beginning of the year.



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