Bank Of China Likely To Report Strong Q3 Results


The author is Michael Werner, senior research analyst covering the Chinese and Hong Kong banks at Sanford Bernstein & Co.

The Chinese banks will report their third quarter earnings during the final week of October.

We expect the group to narrowly beat consensus estimates, with the large banks posting better results. We do not expect all of the banks to post beats like we saw in the first two quarters this year.

We expect third quarter profit growth to come in at 9% year-on-year, down from 13% in the first quarter and 15% in the second quarter.

We also expect return-on-equity (ROE) to fall 180 basis points year-on-year.

Lastly, we see the net interest margins of the large banks to benefit from the tighter interbank liquidity environment. They will also benefit from a better mix of new loans issued during the quarter.

We expect Bank of China to report the best results in the quarter. Minsheng Bank is likely to post the worst results.

 

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