BEIJING - China's biggest banks posted their worst profit declines in more than a decade as bad debt ballooned and the government called on them to help backstop the slumping economy, putting pressure on plans to pay dividends next year.
The banks also warned that the second half would continue to be challenging."The global economy faces unfavorable conditions including significant contractions in global trade and investments, volatile financial markets, limitations on interactions between countries, disruption of globalization and heightened geopolitical tensions," ICBC said in its report.
"Under mounting political pressure, China banks not only have had to further cut loan yields to subsidize the real economy, but also need to accelerate counter-cyclical provisioning and adopt more conservative NPL assumptions in setting provisions," Citigroup analysts led by Judy Zhang wrote."The potential negative earnings growth will overhang the China banks' near-term share performance.
"The dividend policy needs to be aligned with the external environment and conditions," Bocom Vice President Guo Mang said on Friday."It's necessary for every bank to study their current policy - while trying to retain more capital we should also handle the relationship between bank growth and shareholder dividends."