Bank of China warns of real estate market risks

By Ziyi Tang and Engen Tham

BEIJING/SHANGHAI (Reuters) – China’s Bank of Communications (BoCom) on Friday warned of liquidity risks in the real estate sector after posting a nearly 5% rise in first-half net profit. “Asset quality control in the second half of the year is still facing quite significant challenges and pressures, such as the liquidity problems seen in the real estate sector,” chief risk officer Lin Hua told a conference. release, adding that the risk could spread to others. Industries. Lin also expects the quality of retail credit assets to fluctuate in the second half, with the risk on credit card debt quite high. The results come after a dismal first half in which rising developer defaults dampened the real estate market as COVID shutdowns in some cities brought business to a halt.

But despite this, Vice President Zhou Wanfu said housing projects that had been delayed accounted for just 1.55% of the bank’s mortgage portfolio at the end of July, or 23.6 billion yuan (3 $.44 billion) of outstanding mortgages. Delinquent loans represented only 0.03% of total mortgage loans. The lender reported a non-performing loan ratio of 1.46% at the end of the second quarter against 1.47% at the end of the previous one. “Since the beginning of this year, against the backdrop of changes not seen in a century intertwined with an unprecedented pandemic outbreak, the complexity, severity and uncertainty faced by the country’s economic environment have increased with more risks. and challenges,” BoCom said in a statement. the Hong Kong Stock Exchange. BoCom reported a 4.8% increase in first-half net profit despite what it called the unprecedented coronavirus pandemic. Profits reached 44.04 billion yuan for the January-June period, up from 42.02 billion yuan a year earlier, the bank said in its statement. The net interest margin (NIM) – a key indicator of profitability – was 1.53% at the end of June compared to 1.56% at the end of March, although Vice President Guo Mang warned that commercial lenders are under pressure down on their NIM.

($1 = 6.8627 Chinese yuan renminbi)

(Reporting by Engen Tham and Ziyi TangEditing by David Goodman, Kirsten Donovan)

Penny D. Jackson