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Market Daily Report: Bursa Malaysia Ends Higher In Line With Most Regional Markets

KUALA LUMPUR, Sept 20 (Bernama) -- Bursa Malaysia ended higher on Friday in line with most Asian markets, mirroring gains from Wall Street, where investors welcomed the US Federal Reserve's substantial interest rate cut. The FTSE Bursa Malaysia KLCI (FBM KLCI) rose by 3.17 points, or 0.19 per cent, to 1,668.82 at the close from Thursday's close of 1,665.65. It opened 5.03 points higher at 1,670.68, trading between 1,668.48 and 1,674.04 throughout the session. In the broader market, gainers outpaced decliners 732 to 468, while 465 counters were unchanged, 850 untraded and 32 suspended. Turnover swelled to 4.19 billion units worth RM5.97 billion, from Thursday's 3.99 billion units worth RM4.08 billion. UOB Kay Hian Wealth Advisors head of investment research, Mohd Sedek Jantan, noted the FBM KLCI's gains were led by utilities, logistics, and banking stocks, reflecting improved market sentiment. Additiona
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China's Top Banks Report Lower Q2 Profits Amid Property Sector Challenges

Four of China's five largest banks reported lower second-quarter profits, as they responded to government pressure to reduce lending rates to stimulate weak loan demand in a slowing economy and struggling property sector. Despite this, all five lenders announced interim dividends for the first time in over a decade.

Key Highlights:

  1. Decline in Profits: Industrial and Commercial Bank of China Ltd (ICBC), the world's largest lender by assets, posted a 0.8% drop in Q2 net profit, while China Construction Bank Corp (CCB) reported a 1.4% decline. Bank of China (BoC) and Bank of Communications (BoCom) also saw lower Q2 profits, although Agricultural Bank of China (AgBank) reported a 14.2% increase.

  2. Pressure on Net Interest Margins (NIM): ICBC and CCB experienced a narrowing of their net interest margins, a key measure of profitability, with ICBC’s NIM falling to 1.43% from 1.48% at the end of June. This trend is expected to continue in the second half of 2024 due to mortgage repricing and government efforts to lower borrowing costs to support the economy.

  3. Higher Dividends Despite Challenges: Despite lower profits, all five banks announced interim dividends, reflecting a push by the Chinese government to boost investor returns. BoCom, for example, will make an interim cash payment of 0.182 yuan per share, totaling 13.52 billion yuan, to be distributed early next year.

  4. Property Sector Impact: The banks face rising risks from bad loans in the property sector. While some, like BoCom, warned of increasing bad debt from developers, others, such as BoC, plan to boost mortgage lending and consumer loans despite falling demand. Residential mortgages have decreased to 17% of the Chinese banking sector's total loans by the end of 2023, down from 21% two years earlier.

  5. Stability of Non-Performing Loans: Despite the challenges, non-performing loan ratios among the five largest banks remained stable or slightly decreased, though concerns about the property sector's contagion effects persist.

The banks’ profitability is under pressure from weak loan demand, lower lending yields, and higher dividend payouts, compounded by ongoing challenges in the property sector and the broader economic environment.

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