Agricultural Bank of China reports asset improvement

Agricultural Bank of China Ltd (ABC) reported significant improvement in asset quality, as the large State-owned commercial lender recorded a year-on-year decline of nonperforming loan ratio by 19 basis points to 1.4 percent at the end of 2019.

Over the same period, the balance of nonperforming loans (NPLs) dropped by 2.79 billion yuan ($393 million) to 187.21 billion yuan. The allowance to NPLs was 288.75 percent, representing an increase of 36.57 percentage points, according to the bank's 2019 annual results announcement.

Ever since the novel coronavirus pneumonia broke out in China, ABC has paid high attention to the impact of the epidemic on its asset quality, said Zhang Qingsong, president of the bank.

"We conducted quantitative scenario-based analysis and pressure tests on each loan that may be affected by the epidemic and carried out risk analysis and monitoring on the industries, regions and clients that were hard-hit by the disease. At the same time, we took targeted measures to prevent and defuse risks," Zhang said at a news conference on Tuesday.

"Based on our analysis, the impact of the epidemic on the asset quality of ABC is temporary and controllable. The senior management team is fully confident about maintaining stable asset quality," he said.

By the end of February, the bank's loans in renminbi and foreign currencies increased by 526.2 billion yuan from the beginning of this year. Among the total, loans to infrastructure construction projects, including transport and water conservancy, increased by 55.7 billion yuan in the first two months. During the same period, loans to manufacturing, wholesale and retail, and information technology sectors combined increased by 49.6 billion yuan.

With the epidemic being effectively contained domestically, the bank will focus on loans to spring plowing and the resumption of work and production. It will further increase the issuance of loans to key fields including transport, energy and healthcare and keep improving inclusive financial services, said Zhang Xuguang, executive vice-president of ABC.

Last year, the bank achieved breakthrough growth in its inclusive finance business, with an increase in inclusive loans to small and micro enterprises by 58.2 percent from the beginning of the year, while the comprehensive financing cost for such enterprises fell 1.2 percentage points.

The bank also recorded a 5.08 percent increase in net profit to 212.92 billion yuan in 2019.