ICBC is increasingly feeling the difficult market conditions. In the first 9 months, the growth in gross income leveled off significantly. At the same time, the bank had to make higher value adjustments on assets. The profit decreased from 252 billion to 229 billion RMB. Non-performing loans were around RMB 285 billion on the balance sheet, an increase of RMB 45 billion over the previous year.
Loans valued at RMB 180 billion (+ RMB 42 billion) were written down from January to September. The increasing risks and write-downs are forcing ICBC to make increasing risk provisions in the form of provisions for possible loan defaults. Loan loss provisions, at RMB 543 billion, were almost twice as high as non-performing loans. The cautious provision policy protects ICBC against a short-term increase in loan defaults.
Should Investors Sell Right Now? Or is it worth joining Industrial, Commercial Bank of China?
With a look at the total loan claims of 18,443 billion RMB, the risks are therefore not off the books in the longer term. This means that only 1.5% of the outstanding receivables are non-performing. Even before the crisis, the Chinese economy was heavily indebted. Quite a few companies have poor credit ratings and are supported by the state. Against this background, the most recent economic upheavals represent a significant risk for ICBC. At 12.8%, the core capital ratio is slightly reduced, but currently still sufficient.
Buy, hold or sell – Your Industrial, Commercial Bank of China review dated 31.12. provides the answer:
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