ICBC to Support Stabilization of China’s Property Market amid Profit Growth Concerns

ICBC, the world’s largest lender, has announced its support for efforts to stabilize China’s property market in the face of increasing volatility. The move comes as Chinese regulators push banks to speed up approvals of new loans to struggling private developers, amidst concerns about the sector’s health.

The comments were made by Wang Jingwu, a vice president at ICBC, at a press conference following the publication of the bank’s annual results. While specifics about the type of support ICBC will provide were not disclosed, Wang emphasized that the bank would treat all property firms equally, regardless of ownership.

The focus on the property sector’s challenges was also reflected in the earnings reports of other major Chinese banks. Bank of Communications Co Ltd reported a higher proportion of non-performing loans from property firms, highlighting risks to asset quality. Meanwhile, Agricultural Bank of China saw a slight increase in net profit in 2023, with bad loans primarily originating from the property sector and local government debt.

Looking ahead, Fitch Ratings Director Elaine Xu emphasized the potential pressure on banks’ asset quality and profitability in 2024, particularly due to weakness in the property sector and local government financing vehicles. The narrowing net interest margins of ICBC, BoCom, and AgBank are expected to continue facing challenges in the coming year.

Smaller regional banks in economically weaker regions, which heavily rely on property loans, may be particularly vulnerable to negative impacts on their credit profiles. As the property market in China continues to face uncertainties, the role of financial institutions in supporting stability remains crucial.