KUALA LUMPUR, March 30 (Bernama) -- Bursa Malaysia’s benchmark index closed lower today, in line with most regional markets, as investors adjusted their risk exposure amid spiralling oil prices driven by the ongoing West Asia conflict, now in its second month. At 5 pm, the FTSE Bursa Malaysia KLCI (FBM KLCI) retreated by 24.75 points or 1.44 per cent to 1,687.90 from Friday’s close of 1,712.65. The market bellwether opened 10.57 points weaker at 1,702.08 and fluctuated between 1,682.79 and 1,702.38. The broader market was bearish, with decliners thumping advancers 956 to 371. A total of 373 counters were unchanged, 1,042 untraded and 134 suspended. Turnover expanded to 3.98 billion units worth RM4.85 billion from last Friday’s 2.97 billion units worth RM3.25 billion.
China’s state-owned lenders delivered muted earnings growth in 2025, highlighting ongoing pressure from policy-driven lending and shrinking interest margins.
Profit Growth Slows Across Major Lenders
Agricultural Bank of China reported net profit growth of 3.2% to 291 billion yuan, while Bank of China posted a weaker 2.2% increase.
Similar trends were seen across peers, including Industrial and Commercial Bank of China and China Construction Bank, reflecting sector-wide earnings constraints.
Despite the modest growth, total industry profits still reached 2.38 trillion yuan, up 2.3% year-on-year.
Margin Compression Remains Key Headwind
The banking sector continues to face a “double squeeze”:
- Record-low net interest margins (NIMs)
- Policy pressure to support economic growth through lending
This has limited profitability even as loan volumes expand.
Asset Quality Shows Early Signs of Stress
While headline non-performing loan (NPL) ratios improved slightly, underlying risks are emerging:
- Retail loan quality deteriorating, particularly in credit cards
- Rising overdue loans despite aggressive write-offs
For ICBC, loan impairment provisions rose 4.5%, indicating heightened caution toward credit risks.
Government Support Measures Underway
Authorities have stepped in to stabilise the sector, announcing plans to issue special sovereign bonds to recapitalise major banks.
This underscores the importance of maintaining confidence in China’s US$69 trillion financial system.
Outlook: Margins Near Bottom?
There are early signs that pressure may be easing.
Management commentary suggests margin contraction is slowing, while analysts expect net interest margins to bottom out in 1H2026, supported by a shift toward:
- More disciplined lending practices
- Improved risk-based pricing
Investor Takeaways
- China’s major banks reported weak profit growth (~2–3%), reflecting margin pressure.
- Net interest margins remain at historic lows, constraining earnings.
- Retail asset quality is deteriorating, raising credit risk concerns.
- Government support via bank recapitalisation signals systemic importanc
Comments
Post a Comment