ABC doesn't plan to raise funds this year

Agricultural Bank of China Ltd, the nation's third-largest lender by market value, said it has no plans to raise fresh capital this year as its capital adequacy ratio remained at a reasonable level of 11.94 percent at the end of 2011, up marginally from 11.59 percent a year earlier.

The capital adequacy ratio improved in the fourth quarter of 2011 after the bank's 50 billion yuan ($7.94 billion) debt issuance.

Large banks are required by the China Banking Regulatory Commission to meet a minimum capital adequacy ratio of 11.5 percent.

ABC's core capital adequacy ratio narrowed slightly to 9.5 percent at the end of 2011 from 9.75 percent a year earlier.

Chairman Jiang Chaoliang told reporters in Hong Kong on Thursday that the bank currently has no plans to issue new debt, a week after smaller rival Bank of Communications Co Ltd said that it will raise 56.6 billion yuan in a private share placement to shore up capital.

ABC said that its net profit for last year rose 28.5 percent to 121.96 billion yuan as its net interest margin improved and fee income grew.

Total loans outstanding amounted to 5.63 trillion yuan, an increase of 13.6 percent.

The net interest margin widened to 2.85 percent from 2.57 percent a year earlier. The bank said it expects the margin to remain stable this year.

ABC generated 68.8 billion yuan from fee-based businesses including credit cards, up 49 percent from the previous year.

Vice-President Pan Gongsheng played down risks from loans to local government financing vehicles, saying that the debt risk is under control.

The country's bank stocks saw a massive sell-off last year amid concerns over local government debt and asset quality.

There could be a bigger problem in 2012 as China's economy slows, credit supply remains restrained and the housing market cools further, rating agency Standard & Poor warned in a report dated March 12.

"A credit market downturn is in the cards for China's banking sector," S&P's Ratings Services said in the report.

Outstanding loans to local government financing vehicles at ABC totaled about 339.7 billion yuan at the end of 2011, accounting for 7.1 percent of the lender's total loans, according to figures provided by Pan.

ABC, which had the highest bad loan ratio among the country's biggest lenders as of mid-2011, saw its non-performing loan ratio drop to 1.55 percent at the end of 2011 from 2.03 percent a year earlier.

The lender also beefed up its loan-loss reserves. The provision coverage ratio rose to 263.1 percent from 168.05 percent at the end of 2010.

Shares of ABC fell 1.12 percent to HK$3.52 (56 US cents) in Hong Kong on Thursday. The shares have gained 4.09 percent in Hong Kong this year.

emmaan@chinadailyhk.com

(China Daily 03/23/2012 page15)