- What Recent Rally and Dividend Hike Could Mean for Postal Savings Bank of China in 2025
Sep 9, 2025
Thinking about what to do with Postal Savings Bank of China stock? You're not alone, and you’re right to be considering your options after the staggering run this name has had. Over the past five years, investors have seen the stock climb an impressive 122.4%, and in the last year alone, it has delivered a jaw-dropping 51.7% return. Year-to-date, that momentum has continued, with the shares up 27.9%. It’s true that shorter-term moves have been calmer, with a 1.4% rise over the past month and a 0.7% gain in the last week, but those numbers still speak to underlying confidence and possibly a shift in how the market is viewing risk in China’s banking sector.
With market conditions and sentiment shifting, stocks like Postal Savings Bank of China often attract more attention from both value hunters and growth enthusiasts. So, how does it stack up from a valuation standpoint? We’ve run it through six different valuation checks to get a big-picture read on whether it’s undervalued or priced for perfection. The company scores a 2 out of 6 for being undervalued, suggesting some, but not sweeping, justification for its recent optimism.
But as you know, valuation isn’t just about ticking boxes. In the next section, we’ll break down the different approaches used to arrive at those scores, and towards the end, I’ll share one often-overlooked way to truly get a sense of the company’s value that most analysts miss.
Postal Savings Bank of China scores just 2/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.
Approach 1: Postal Savings Bank of China Excess Returns Analysis
The Excess Returns model offers a direct look at how much profit Postal Savings Bank of China generates on its investments, above and beyond what shareholders would expect given the bank's cost of capital. This approach focuses on a few key metrics to assess whether the company is truly creating extra value per share over time.
According to the data, Postal Savings Bank of China has an average Return on Equity of 8.19%, with a stable book value per share at HK$8.23 and a stable earnings per share estimate at HK$0.77. The cost of equity is set at HK$0.81 per share, so the excess return figure is slightly negative at HK$-0.04 per share. Consensus forecasts from 10 analysts have contributed to these estimates.
While the bank has maintained steady growth and sound return rates, the core issue highlighted by the model is that the returns just barely cover the cost of capital, leaving little room for significant excess profits in the long run. Despite this, the model’s intrinsic value estimate currently suggests the stock is 40.1% undervalued, meaning the shares are trading at a notable discount compared to the value implied by its fundamentals.
Story Continues
Result: UNDERVALUED
Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Postal Savings Bank of China.1658 Discounted Cash Flow as at Sep 2025
Our Excess Returns analysis suggests Postal Savings Bank of China is undervalued by 40.1%. Track this in your watchlist or portfolio, or discover more undervalued stocks.
Approach 2: Postal Savings Bank of China Price vs Earnings
Using the Price-to-Earnings (PE) ratio is often the go-to metric when evaluating profitable banks like Postal Savings Bank of China, as it tells investors how much they are paying for each dollar of current earnings. This multiple is particularly useful for steady, mature businesses because it reflects the market’s expectations for continued profitability and future growth in relation to risk.
Growth expectations and perceived risk play significant roles in what constitutes a “normal” or “fair” PE ratio. Higher growth prospects usually justify a higher PE, while increased risk or weaker growth can drag it down. Currently, Postal Savings Bank of China trades at a PE ratio of 7.95x, which sits above the industry average of 6.13x and its peer average of 6.93x. On the surface, this might suggest the stock is a bit expensive compared to others in its sector.
However, Simply Wall St's proprietary Fair Ratio for the company is 6.76x. This measure takes into account not just industry averages and peer performance but also specific company attributes like earnings growth, profit margins, market capitalization, and risk factors. This model offers a more tailored and accurate benchmark than simply comparing to peers or the wider industry. In Postal Savings Bank of China’s case, the current PE is just a hair above the Fair Ratio, indicating that the stock is priced about right relative to its fundamentals and risk profile.
Result: ABOUT RIGHTSEHK:1658 PE Ratio as at Sep 2025
PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover companies where insiders are betting big on explosive growth.
Upgrade Your Decision Making: Choose your Postal Savings Bank of China Narrative
Earlier we mentioned that there’s an even better way to understand valuation, so let's introduce you to Narratives. A Narrative is simply your story for a company, connecting your beliefs about its future, such as revenue growth, profit margins, or risks, to numbers like forecasted earnings and fair value. This approach makes it easy to clarify your own reasoning: instead of relying solely on one-size-fits-all models, you create or choose a Narrative that reflects your outlook and then see how it shapes the company’s fair value.
Narratives are available to everyone on Simply Wall St’s Community page, where millions of investors share and debate their perspectives. With Narratives, you can quickly see whether your expectations mean the stock is attractively priced or not, and shift your stance as new information arrives. Narratives update automatically with fresh news or earnings data. For example, one investor might believe Postal Savings Bank of China's profits will surge, supporting a higher fair value. Another might expect modest growth and suggest a more conservative price target. Narratives let you test these stories side by side, giving you a smarter and more dynamic way to decide when to buy or sell.
Do you think there's more to the story for Postal Savings Bank of China? Create your own Narrative to let the Community know!SEHK:1658 Community Fair Values as at Sep 2025
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
Companies discussed in this article include 1658.HK.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team@simplywallst.com
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- Chinese Bank Shares Slump as Earnings Show Margin, Profit Pain
Apr 30, 2025
(Bloomberg) -- Shares of Chinese banks slumped following weak earnings, with analysts concerned the global trade war will further undermine their profit.
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Lenders were the worst performers in the Hang Seng China Enterprises Index after some of them reported a drop in profit and lower margins. Industrial & Commercial Bank of China Ltd. fell as much as 6% in Hong Kong, after China’s biggest bank saw its net income fall 4% in the first quarter. Shares in China Merchants Bank Co. and Postal Savings Bank of China Co. slid at least 5%.
The financial health of Chinese lenders is being closely watched as Beijing gears up for a deepening trade dispute with the US. Banks’ profits were already under pressure after China stepped up monetary stimulus late last year, lowering rates applied on loans and mortgages. Analysts are also worried the escalating trade war will hurt the banks’ overseas business.
Banks “continue to face pressure of having to support the China economy amid an uncertain economic environment and this is evident in numerous banks reporting falls in net profits,” said Michael Chang, head of Asia financials at CGS International Securities HK. “Net interest margins are still on a downward trajectory, with no signs of any bottoming amid likely continued monetary easing.”
Chinese officials have indicated they may further loosen monetary conditions to bolster the economy, suggesting lenders will continue to face margin squeeze. China will lower reserve requirement ratio and interest rates based on domestic and international economic situation, to ensure ample liquidity, the People’s Bank of China’s Deputy Governor Zou Lan said at a briefing this week.
The slide in banking shares drove a 0.4% drop in the Hang Seng China Enterprises Index, which underperformed the MSCI Asia Pacific gauge’s advance. China Construction Bank Corp. saw a big decline as shares traded ex-dividend.
“Most of the big lenders saw a pretty big contraction in net interest margin from end of last year, largely thanks to mortgage loans repricing in January after earlier cuts in loan prime rates,” said Francis Chan, an analyst with Bloomberg Intelligence. “The outlook for margins doesn’t look so rosy either as there’s bigger probability of more rate cuts this year.”
Story Continues
--With assistance from Amanda Wang.
(Updates with BI comment, shows China Construction Bank is trading ex-dividend.)
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- Postal Savings Bank Of China Co Ltd (PSTVY) (FY 2024) Earnings Call Highlights: Strong Asset ...
Apr 3, 2025
Operating Income: RMB349.133 billion, a year-on-year increase of 1.81%. Net Profit Attributable to Parent Company: RMB86.479 billion, YoY growth rate of 0.24%. Total Assets: Exceeded RMB17 trillion, an increase of 8.64%. Total Liabilities: RMB16 trillion, an increase of 8.69%. Net Interest Income Growth: 1.53%. Net Interest Margin (NIM): 1.87%. Interest Rate Paid on Deposit: 1.44%, the lowest among listed banks. Non-Performing Loan (NPL) Ratio: 0.9%. Newly Happened NPL Ratio: 0.84%. Allowance to NPL Ratio: 286.15%. Corporate Revenue Increase: 17% year-on-year. Fee-Based Income Increase: 43% year-on-year. Other Non-Interest Income Increase: 14.82% year-on-year. AUM Scale: Reached RMB16.69 trillion. Consumer Loans Growth: Increased by more than RMB130 million. Housing Loan Growth: Ranked first among state-owned banks. Corporate Bond Investment Increase: 21.21%. PSBC Wealth Management Increase: 32%, ranking top among major state-owned banks.
Warning! GuruFocus has detected 6 Warning Signs with PSTVY.
Release Date: April 02, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
Postal Savings Bank Of China Co Ltd (PSTVY) achieved operating income of RMB349.133 billion in 2024, marking a year-on-year increase of 1.81%. The bank's net profit attributable to the parent company was RMB86.479 billion, with a YoY growth rate of 0.24%. Total assets exceeded RMB17 trillion, an increase of 8.64%, demonstrating strong asset growth. The bank maintained a low non-performing loan (NPL) ratio of 0.9%, indicating good asset quality. Postal Savings Bank Of China Co Ltd (PSTVY) received a capital injection from the Ministry of Finance, enhancing its capital base and future growth potential.
Negative Points
The banking industry faces pressure on retail loan asset quality, with a noted increase in NPLs for personal loans. The net interest margin (NIM) is under pressure due to a low interest rate environment, affecting profitability. There is increased competition in the deposit market, which may impact the bank's ability to maintain low interest costs. The bank's reliance on agency deposits poses challenges in a low interest rate environment, necessitating adjustments to the agency fee structure. The macroeconomic environment, including the real estate market decline, poses risks to asset quality and loan performance.
Q & A Highlights
Q: What are the plans and outlook for the future development of Postal Savings Bank of China (PSBC) as the 14th five-year plan ends and the 15th begins? A: Guoyu Zheng, Chairman of the Board, stated that PSBC will accelerate strategic optimization to build a top-tier retail bank that is inclusive, balanced, resilient, intelligent, and dynamic. The bank aims to provide high-quality financial services, enhance digitalization, and maintain a prudent risk appetite to achieve sustainable growth.
Story Continues
Q: How will PSBC respond to the challenges of a low-interest rate environment, and what are the expectations for the Net Interest Margin (NIM)? A: Jianjun Liu, Head of the Bank, explained that PSBC will enhance asset and liability management to build a stable balance sheet. The bank will focus on balanced credit extension, core liability competitiveness, and flexible non-credit allocation to maintain NIM at an excellent level despite downward pressure.
Q: Can you summarize the non-interest income features in 2024 and the outlook for 2025? A: Xueming Xu, Deputy Head of the Bank, highlighted that non-interest income grew by 3.1% in 2024, driven by corporate business, asset management, and retail sectors. In 2025, PSBC aims to diversify non-interest income further by expanding investment banking, transaction banking, and wealth management services.
Q: What measures has PSBC taken to enhance its competitiveness using AI and digital tools? A: Jianjun Liu, Head of the Bank, noted that PSBC has invested in cloud platforms, AI, and big data to strengthen its digital ecosystem. The bank has developed AI applications for sales, risk control, and customer service, aiming to integrate these technologies into core business operations.
Q: How does PSBC plan to leverage the recent capital injection, and what impact will it have? A: Xueming Xu, Deputy Head of the Bank, explained that the capital injection will boost PSBC's capital ratio by 1.5 percentage points, enhancing its ability to serve the real economy. The bank plans to use the funds to support growth initiatives and improve profitability, while ensuring efficient capital management.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
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- China Ends Probe of Ma-Backed Ant With $984 Million Fine
Jul 7, 2023
(Bloomberg) -- Chinese regulators imposed a 7.12 billion yuan ($984 million) fine on Ant Group Co., according to a statement from the central bank, wrapping more than two years of probes into the finance technology giant founded by billionaire Jack Ma.
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The People’s Bank of China said it imposed fines on Ant Group and its subsidiaries, including confiscation of illegal income, according to a statement on Friday. The sanctions were in response to violations of laws and regulations in areas including financial consumer protection, payment and settlement business and anti-money laundering obligation in the past years, the statement showed.
The move draws a line under the multi-year crackdown that torpedoed Ant’s record initial public offering in 2020 and ensnared some of the nation’s most powerful private firms in sectors from online education to gaming. It paves the way for Ant to revive growth and even eventually resurrect plans for an IPO.
Ant Group said it has completed rectification required by China’s financial regulators, according to a company statement.
Fines were also issued to a payment platform of Alibaba rival Tencent Holdings Ltd., as well as PICC Property & Casualty Co., Postal Savings Bank of China Co. and Ping An Bank Co. given the problems found in previous law enforcement inspections, according to the statement.
Most of the key problems in financial platform enterprises such as Ant Group and Tencent have been rectified, the statement said.
It’s unclear why Tencent also received a fine. The WeChat operator’s executives have stressed repeatedly since 2022 that their financial businesses are in full compliance with the law, and that they’re in constant dialogue with Beijing.
A meaningful relaxation of curbs on Ant — one of the most high-profile casualties of President Xi Jinping’s sweeping clampdown on the country’s tech giants — would send a strong signal that policymakers are following through on recent pledges to support the industry. The Communist Party’s evolving stance toward the private sector has become one of the most closely watched developments in global markets in recent years, with some observers even calling China’s sprawling internet sector uninvestable.
Ant’s bottom line has eroded since the days it was preparing for the world’s largest IPO in 2020, while its affiliate Alibaba is in the process of splitting into six main businesses from cloud services to meal delivery and logistics. While investors initially cheered the potential creation of value, Alibaba’s shares have come off their 2023 highs and have shed more than $600 billion of their value since the Ant episode began.
Shares of Alibaba rose 3.4% in Hong Kong after Reuters reported earlier China may impose a fine as soon as Friday.
“The market likes it because scrutiny looks likely to be over and the fine, though big in absolute terms, is very manageable for such a big company,” said Vey-Sern Ling, managing director at Union Bancaire Privee, after the Reuters report. The levy is less than the 9.6 billion yuan profit that Ant generated in the December quarter.
Ant co-founder Jack Ma returned to China in early March after a prolonged period of traveling overseas. The government persuaded Ma to go back to the mainland as a means to showcase authorities’ support for private entrepreneurs, Bloomberg News had reported.
The move follows Ma’s decision to cede control of Ant in January, holding about 6.2% voting rights after the change. Following that, the Communist Party chief of Hangzhou city praised Ant for abiding by the party’s leadership, and required local government departments to solve problems raised by the fintech company.
Ant said in January it has no plans for an IPO now and is focusing on its business. Still, the company’s Chairman Eric Jing said in 2021 that it would eventually go public.
More than two years ago, Chinese regulators abruptly halted Ant’s would-be record IPO, sending shock waves across global capital markets. New rules have been slapped on the fintech giant, which has operations ranging from consumer lending and wealth management to online payments.
The central bank ordered Ant to fold all financial units into a holding company. It also told the firm to open up its payments app to competitors and sever improper linking of payments with other products including its lending services.
It could take longer than anticipated for Ant to resume an IPO. Companies can’t list domestically on the country’s so-called A-share market if they have had a change in control in the past three years — or in the past two years if listing on Shanghai’s STAR market, which is geared toward new technology companies. For Hong Kong’s stock exchange, this waiting period is one year.
Ant’s valuation will also look different if it were to go public again. While Ant fetched a valuation of $280 billion pre-IPO, the myriad regulations imposed over the past two-plus years mean it’s now worth a fraction of that, as it’s now more “fin” than “tech.”
Ant could also spin out some of the businesses such as blockchain technology, its database operation known as OceanBase and global services, people familiar have said. Those deliberations are preliminary and could be subject to change.
Ant Could be Valued at Only $22 Billion-$57 Billion: BI
Expectations of growth and margin are generally lower for banks than technology companies. Fidelity Investments, for example, cut its estimated valuation for Ant to $64 billion, from $235 billion just before the IPO was suspended.
--With assistance from Evelyn Yu.
(Updates throughout with context, Ant Group response.)
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- 16 Biggest Banks in the World
Nov 3, 2022
In this article, we will take a look at 16 of the biggest banks in the world. If you want to see more of the biggest banks in the world, go directly to 5 Biggest Banks in the World.
The biggest banks in the world, otherwise known as megabanks, are giant companies that have substantial assets on their balance sheets. Many offer a variety of different financial services including commercial banking, corporate banking, capital markets, asset management, and more.
Given their scale, many megabanks enjoy substantial advantages versus smaller banks, especially in technology. Bloomberg's Paul J. Davies writes, "The biggest banks, with the greatest profits, are already investing vastly more in faster, cheaper, easier-to-use digital apps than smaller banks can afford. Technology is helping big banks gain market share and is more likely to drive consolidation in the years ahead than regional bank mergers."
In 2022 alone, JPMorgan Chase & Co. (NYSE:JPM)'s budget for technology in its consumer and small business banking businesses was $2.8 billion, which is more than the revenue of many banks. With having greater technology in addition to other advantages, JPMorgan Chase & Co. (NYSE:JPM) has increased its market share in U.S. consumer deposits from 8.9% in 2017 to 10.3% in 2021 and CEO Jamie Dimon believes there could be even more growth in the future.
Davies adds, "Banking is increasingly a scale game where the biggest players are most able to absorb high fixed costs and generate the best returns. Advantage begets advantage as profits can be plowed back into making services cheaper and continuing to build smarter technology that customers want to use."
The Leading Megabanks
Many of the world's biggest banks are based in the United States or China.
Many megabanks are based in the United States because the United States has the world's largest economy. In 2021, the U.S. had a GDP of $23 trillion, outpacing second place China's $17.73 trillion and third place Japan's $4.94 trillion.
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In addition to having the world's largest economy, the United States has the most popular global reserve currency with the U.S. dollar. According to the IMF, the U.S. dollar accounted for 59% of global foreign exchange reserves in 2021, versus 21% for the Euro, 6% for the Yen and 5% for the Great Britain Pound. Given the dominance, the U.S. enjoys lower interest rates than if the U.S. dollar wasn't the dominant global reserve currency.
Several Chinese banks are among the biggest banks in the world. Given that China's government plays a big role in the economy, it has played a part in the formation and growth of several megabanks there that help develop the country. With the big four banks in China each state owned, China's government can sometimes use the Chinese megabanks for economic policies. It can sometimes be more efficient to ask big banks in China to make more loans than it is to simply lower the interest rate, for example.
Several Japanese banks also rank among the 16 Biggest Banks in the World given the size of Japan's economy.
In terms of the future, there could eventually be several Indian companies that make it to the list given how quickly India's economy is growing.
2022
Given high inflation, the Federal Reserve has increased interest rates multiple times this year.
With the substantially higher rates, there is a potential for an economic slowdown or a recession by the end of 2023 if not sooner. As a result, many megabanks, along with many other companies, could face headwinds.
Given the uncertainty, it could be a good idea for long term investors to own well diversified portfolio of stocks across many different sectors.
Pixabay/Public Domain
Methodology
For our list, we took the top 16 out from S&P Global Market Intelligence's World's 100 Largest Banks whose list is as of December 31, 2021 for the majority of banks on the list.
16 Biggest Banks in the World
16. Wells Fargo & Company (NYSE:WFC)
Total Assets: $1.95 trillion
Although rising interest rates could increase credit losses during an economic downturn, Wells Fargo & Company (NYSE:WFC) is currently benefiting from the rising rates with higher net interest income. Due to the interest rate increases, Wells Fargo & Company (NYSE:WFC) reported its best net interest income since 2019 and the bank estimates its net interest income will rise 24% year over year for 2022. If it is more profitable and the bank makes quality loans, Wells Fargo & Company (NYSE:WFC) could potentially realize a higher return on its assets.
15. Mizuho Financial Group
Total Assets: $1.96 trillion
Mizuho Financial Group is a Japan based bank holding company with $1.96 trillion in assets. The bank has a long history given it was founded in 1864 and Mizuho Financial Group is economically important given its commercial and retail banking operations. Mizuho Financial Group has over 20 million customers, representing approximately one fifth of the adult population in Japan.
14. Postal Savings Bank of China
Total Assets: $1.98 trillion
Postal Savings Bank of China is one of the largest banks in China with total assets of $1.98 trillion. Postal Savings Bank of China also has around 40,000 outlets, and offers services to more than 600 million personal customers. Given the slowing Chinese economy, Postal Savings Bank of China faces headwinds in the near term but the bank nevertheless has potential to increase its assets if it maintains its market share.
13. Japan Post Bank
Total Assets: $2 trillion
Japan Post Bank is a leading Japanese bank with $2 trillion in assets. Although the Japanese government owned around 57% of Japan Post Bank in 2020, it has a goal of divesting more of its stake in the future. If Japan Post Bank is a privately owned bank, it could potentially be more efficient.
12. Sumitomo Mitsui Financial Grp, Inc. (NYSE:SMFG)
Total Assets: $2.18 trillion
Sumitomo Mitsui Financial Grp, Inc. (NYSE:SMFG) is one of Japan's largest banks with $2.18 trillion in total assets. Sumitomo Mitsui Financial Grp, Inc. (NYSE:SMFG) provides commercial banking, leasing securities, consumer finance and other services in Japan and internationally. Due to macroeconomic headwinds, Sumitomo Mitsui Financial Grp, Inc. (NYSE:SMFG) shares are down 16.8% year to date.
11. Citigroup Inc. (NYSE:C)
Total Assets: $2.29 trillion
Given Citigroup Inc. (NYSE:C) doesn't have as big of a retail banking business as some of its other big four bank peers, the company hasn't benefited that much from the higher rates. Like the other big banks in the United States, Citigroup Inc. (NYSE:C) faces headwinds if a recession occurs in 2023. In the long term, however, Citigroup Inc. (NYSE:C) still has substantial quality earnings potential and the bank ranks as one of the largest in the world by assets.
10. Crédit Agricole Group
Total Assets: $2.67 trillion
Crédit Agricole Group is France's second largest bank with total assets of $2.67 trillion. Given its scale, Crédit Agricole Group has around 147,000 employees, 53 million customers, and operations in 47 countries. Like other international banks, Crédit Agricole Group faces near term headwinds given the economic slowdown globally.
9. BNP Paribas
Total Assets: $2.91 trillion
BNP Paribas is one of the largest banks in the world with $2.91 trillion in total assets. The France-based bank also has around 190,000 employees and operations in 65 countries. Although BNP Paribas sold Bank of the West to Bank of Montreal for $16.3 billion, the bank is reportedly not interested in buying another bank with the proceeds according to CFO Lars Machenil in a Q2 earnings call. Instead BNP Paribas is planning to invest the proceeds in potentially accelerating organic growth.
8. HSBC Holdings plc (NYSE:HSBC)
Total Assets: $2.95 trillion
HSBC Holdings plc (NYSE:HSBC) reported stronger than expected results for its third quarter with pre-tax profit of $6.5 billion versus the expected $6 billion and the same quarter last year's $5.5 billion. Although profits are higher, HSBC Holdings plc (NYSE:HSBC) has committed to its guidance of a 50% dividend payout ratio for 2023 and 2024. Like many other banks, rising interest rates have helped HSBC Holdings plc (NYSE:HSBC) realize higher returns in 2022 although the bank also faces potential headwinds if the global economy slows.
7. Bank of America Corporation (NYSE:BAC)
Total Assets: $3.17 trillion
Bank of America Corporation (NYSE:BAC) is the United States' second largest bank with $3.17 trillion in total assets. Although an economic slowdown or recession in the near term will be a headwind, Bank of America Corporation (NYSE:BAC)'s results are currently strong at least when it comes to consumer spending growth. Bank of America Corporation (NYSE:BAC) CEO Brian Moynihan commented on the bank's third quarter results, “An analyst might wonder whether the talk of inflation, recession, and other factors could rectify slower spending growth. We just don’t see it here at Bank of America.” For Q3, Bank of America Corporation (NYSE:BAC) 's spending across debt and credit cards rose 9% year over year and consumer loans also rose by $14 billion.
6. Mitsubishi UFJ Financial Group, Inc. (NYSE:MUFG)
Total Assets: $3.18 trillion
Mitsubishi UFJ Financial Group, Inc. (NYSE:MUFG) is Japan's largest bank with total assets of $3.18 trillion. In terms of its operations, Mitsubishi UFJ Financial Group, Inc. (NYSE:MUFG) offers many services including retail and corporate banking as well as asset management. Due to headwinds, shares of Mitsubishi UFJ Financial Group, Inc. (NYSE:MUFG) are down around 14% year to date.
Click to continue reading and see 5 Biggest Banks in the World.
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Disclosure: None. 16 Biggest Banks in the World is originally published on Insider Monkey.
- China's Big Six banks meet first-quarter profit forecasts, but Covid-led slowdown poses higher bad loan risks
Apr 29, 2022
China's Big Six state-controlled banks reported first-quarter net profit growth in line with analysts' expectations on the back of strong loan growth and lower bad-loan provisions, helped by the central bank's supportive measures.
The Big Six - Agricultural Bank of China, Bank of Communications, Bank of China, China Construction Bank, Industrial and Commercial Bank of China and Postal Savings Bank of China - reported stable non-performing loan (NPL) ratios in the first-quarter compared with the end of last year, thereby lightening their impairment charges.
But going into the second half, there is likely to be an overall increase in corporate and retail NPLs due to the slowing economy, said Chen Shujin, an analyst at Jefferies.
Do you have questions about the biggest topics and trends from around the world? Get the answers with SCMP Knowledge, our new platform of curated content with explainers, FAQs, analyses and infographics brought to you by our award-winning team.
"We expect more negative impact to [NPL ratios] for personal business loans due to the recent lockdowns in major cities," said Chen.
A health worker takes a swab sample from a woman at a Covid-19 coronavirus testing site outside office buildings in Beijing on April 29, 2022. Photo: AFP alt=A health worker takes a swab sample from a woman at a Covid-19 coronavirus testing site outside office buildings in Beijing on April 29, 2022. Photo: AFP>
The banking sector escaped the impact of the latest Omicron outbreak in Shanghai, which brought China's financial hub to a halt after a lockdown was imposed on April 1. China is now grappling with one the most severe bouts of disruption to economic activity since the Covid-19 pandemic started in late 2019, as the nation's zero-Covid policy has forced factories and businesses to suspend operations intermittently over the last two months.
China's urban unemployment rate rose to 5.8 per cent in March, from 5.5 per cent in February. The onshore yuan, meanwhile, has fallen to a 17-month low against the US dollar, as doubts about whether China could reach its gross domestic growth target of around 5.5 per cent deepened.
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The NPL ratio may still improve in the first half because of the People's Bank of China's continuing monetary loosening policies since late last year, said Chen. With cuts in the reserve requirement ratios, banks generally face less liquidity issues and thus improve the overdue loan ratio.
Below is a summary of the Big Six banks' results for the first-quarter:
Agricultural Bank of China's first quarter net profit rose 7.4 per cent year on year to 70.8 billion yuan (US$10.7 billion). Its NPL ratio improved slightly to 1.41 per cent, down 2 basis points from the end of last year.
Bank of Communications' net profit rose 6.3 per cent to 23.3 billion yuan. Its NPL ratio was 1.47 per cent, down 1 basis point.
Bank of China's net profit rose 7 per cent to 57.8 billion yuan. Its NPL ratio was 1.31 per cent, down 2 basis points.
China Construction Bank's net profit rose 6.8 per cent to 88.7 billion yuan. Its NPL ratio was 1.4 per cent, down 2 basis points.
Industrial and Commercial Bank of China's net profit rose 5.7 per cent to 90.6 billion yuan. Its non-performing loan ratio was unchanged at 1.42 per cent.
Postal Savings Bank of China (PSBC) was the only bank to top estimates. Net profit rose 17.8 per cent to 25 billion yuan, while the NPL ratio was 0.82 per cent, the same as the end of 2021.
PSBC, which has the highest proportion of deposits placed with the central bank among the Big Six, is likely to benefit the most from the PBOC's cut in the reserve requirement ratio, according to Jefferies.
This month the PBOC cut the RRR by a quarter percentage point, the third in the current easing cycle, to 8.1 per cent.
The investment bank has PSBC as one of its top-pick Chinese banks, with a "hold" rating and target price of HK$5.62.
This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP's Facebook and Twitter pages. Copyright © 2022 South China Morning Post Publishers Ltd. All rights reserved.
Copyright (c) 2022. South China Morning Post Publishers Ltd. All rights reserved.
- China's Big Six banks face Covid-19, inflation headwinds after double-digit profit growth in 2021
Mar 31, 2022
China's Big Six state-controlled banks reported double-digit profit growth for 2021, the best since 2013 and in line with analysts' expectations, helped by robust loan growth and fewer bad loans.
But with Covid-19 cases flaring up across China and rising inflation, senior bank officials and analysts painted a bleaker outlook, warning that non-performing loans at Agricultural Bank of China, Bank of Communications, Bank of China, China Construction Bank, Industrial and Commercial Bank of China (ICBC) and Postal Savings Bank of China could climb once again as the nation's economic recovery slows.
China's Big Six bank earnings to reflect recovery from Covid, stronger loan book
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The challenge for banks this year was highlighted by Bank of Communications' president Liu Jun, who said the pandemic presented the global economy with a great "variable".
"The Covid pandemic has [put] downward pressure on the economy on multiple fronts," said Liu. "Additionally, the Russia-Ukraine war has accelerated the global supply chain issue. This means that inflation could become an untameable monster."
He added that even in such a scenario Chinese banks would still have a lot of room to support the country's growth.
Beijing has targeted gross domestic product growth of about 5.5 per cent for this year, much lower than the 8.1 per cent growth in 2021. However, some analysts expect the rise in global commodity prices because of the Russia-Ukraine war to send inflation higher and weigh on GDP growth. China's official consumer price index rose by 0.9 per cent in February from a year earlier.
Postal Savings Bank of China topped profit growth among China's Big Six lenders. Photo: AFP alt=Postal Savings Bank of China topped profit growth among China's Big Six lenders. Photo: AFP>
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Analysts at Jefferies had predicted profit growth of between 10 per cent and 15 per cent for the Big Six, while Morningstar had predicted 8 per cent to 10 per cent gain.
ICBC posted the smallest net profit growth among the Big Six at 10 per cent while Postal Savings Bank of China topped the list at 18.7 per cent.
The profit growth at the Big Six averaged 12 per cent last year, the best after 14.5 per cent in 2013.
Since then their NPL ratios started rising amid a downward trend in the country's GDP growth, said Chen Shujin, an analyst at Jefferies. Chinese banks' NPL ratio was likely to rise in the second half as the impact of a slowing economy would outweigh the relative ease of refinancing by borrowers in the first half, he added.
"Historically, whenever China's economic growth declined by 2 percentage points, banks' NPL ratio would begin to rise," said Chen.
Further clouding the outlook is the loan prime rates, the key benchmarks used by banks to price their corporate and mortgage loans, as analysts expect another cut in April or May. Since last December the one-year rate has been cut twice to 3.7 per cent, while the five-year rate was cut in January to 4.6 per cent, its first cut since April 2020. This would directly pressure banks' net interest margins.
Below is a summary of the Big Six banks' full-year results for 2021.
Agricultural Bank of China net profit rose 11.7 per cent to 241.2 billion yuan (US$38 billion). The NPL ratio improved to 1.43 per cent, from 1.57 per cent in 2020.
Bank of Communications net profit rose 11.9 per cent to 87.6 billion yuan. The NPL ratio declined to 1.48 per cent, from 1.67 per cent.
Bank of China net profit rose 12 per cent to 216.6 billion yuan. The NPL ratio declined to 1.33 per cent, from 1.46 per cent.
China Construction Bank net profit rose 11.6 per cent to 302.5 billion yuan. The NPL ratio declined to 1.42 per cent, from 1.56 per cent.
ICBC net profit rose 10 per cent to 348.3 billion yuan. The NPL ratio declined to 1.42 per cent, from 1.58 per cent.
Postal Savings Bank of China reported an 18.7 per cent jump in net profit to 76.2 billion yuan, the only bank that beat analysts' expectations. Its NPL declined to 0.82 per cent, from 0.88 per cent in 2020.
This article originally appeared in the South China Morning Post (SCMP), the most authoritative voice reporting on China and Asia for more than a century. For more SCMP stories, please explore the SCMP app or visit the SCMP's Facebook and Twitter pages. Copyright © 2022 South China Morning Post Publishers Ltd. All rights reserved.
Copyright (c) 2022. South China Morning Post Publishers Ltd. All rights reserved.
- China Merchants Bank Co., Ltd., Luxembourg Br -- Moody's announces completion of a periodic review for a group of China Banks
Mar 24, 2022
Announcement of Periodic Review: Moody's announces completion of a periodic review for a group of China BanksGlobal Credit Research - 24 Mar 2022New York, March 24, 2022 -- Moody's Investors Service ("Moody's") has completed a periodic review of the ratings -and other ratings that are associated with the same analytical units for the rated entities listed below.The review was conducted through a portfolio review discussion held on 17 March 2022 in which Moody's reassessed the appropriateness of the ratings in the context of the relevant principal methodology(ies), recent developments, and a comparison of the financial and operating profile to similarly rated peers. A possible outcome from periodic reviews is a referral of a rating to a rating committee.This publication does not announce a credit rating action and is not an indication of whether or not a credit rating action is likely in the near future. Credit ratings and outlook/review status cannot be changed in a portfolio review and hence are not impacted by this announcement.Key Rating ConsiderationsThe principal methodology used for this review was Banks Methodology published in July 2021. Please see the Rating Methodologies page on www.moodys.com for a copy of this methodology.Key rating considerations on a forward-looking basis may include but are not limited to the following summarized below.Asset Risk: a bank's asset risk is fundamental to creditworthiness because banks have high leverage, which implies that a small deterioration in asset value has a large effect on solvency. Credit quality problems are typically at the root of most bank failures, even though these problems can take a variety of forms, for example a deteriorating value of the loan collateral, resulting in higher losses. Asset risk includes a bank's other assets as well may also be vulnerable to other non-lending risk including market risk and operational risk.Capital: asset risk and the need for capital go hand in hand. The greater the risk of unexpected loss, the more capital a bank needs to hold in order to retain the confidence of creditors, which enables the bank to fund itself and to shield bondholders from loss.Profitability: profitability is an important indicator of an institution's ability to generate capital, and is hence another measure of its ability to absorb losses and recover from shocks. A bank with weak or negative profitability has less ability to absorb asset risks than one with strong internal capital generation capacity, other things being equal.Funding Structure: a bank's funding structure has a strong bearing on its probability of failure or requiring assistance, because some sources of funds are less reliable than others. A bank that makes significant use of an unreliable funding source perhaps short-term in nature, or from particularly risk-sensitive counterparties is more likely to suffer periodic difficulties in refinancing its debt, putting it at greater risk of needing support.Liquid resources: to provide a full picture of liquidity, an assessment of the funding structure of a bank has to be viewed in the context of the composition of its assets. Liquid resources are enhanced when a bank has high-quality liquid assets that can both be readily sold or pledged for cash in private markets in response to its funding counterparts' changing behavior, or that can in extremis be repoed with central banks under standard terms.Qualitative considerations: There are occasionally other bank-specific considerations that we believe can influence core fundamentals. These additional factors are typically qualitative in nature, although in some cases our assessments may be informed by certain quantitative indicators. These factors include Business Diversification, Opacity and Complexity and Corporate Behavior.The bank ratings are ultimately derived from the application of our Support and Structural Analysis, which comprises the following:Affiliate Support, where an entity may be supported by other entities within a group, or occasionally affiliated third parties, thus reducing its probability of default.Loss Given Failure (LGF), where we undertake a liability-side analysis to assess the impact of a failure absent government support in terms of the potential resultant loss on the bank's rated debt instruments. We also incorporate instrument-specific coupon features.Government Support, where an entity may be supported by public bodies, such as local, regional, national, or supranational institutions, again reducing the risk for some or all instruments. We assess this using our JDA framework.This announcement applies only to Rated Entities with EU rated, UK rated, EU endorsed and UK endorsed ratings. Rated Entities, with Non EU rated, non UK rated, non EU endorsed and non UK endorsed ratings may be referenced herein to the extent necessary, if they are part of the same analytical unit.Please see the Issuer page on www.moodys.com, for each of the ratings covered, most updated credit rating action, rating history, and Credit Rating action Press Release including the rating rationale and factors that could lead to a rating upgrade or downgrade.List of Issuers/Rated Entities Agricultural Bank of China Limited Bank of China Limited Bank of Communications Co., Ltd. Bank of Nanjing Co., Ltd. Bank of Ningbo Co., Ltd. Bank of Shanghai Co., Ltd. Bank of Suzhou Co., Ltd. China Bohai Bank Co., Ltd. China CITIC Bank Corporation Limited China Construction Bank Corporation China Everbright Bank Company Limited China Guangfa Bank Co., Ltd. China Merchants Bank Co., Ltd. China Zheshang Bank Co., Ltd. Chongqing Rural Commercial Bank Co., Ltd. DBS Bank (China) Limited E. Sun Bank (China) Limited Fubon Bank (China) Co., Ltd. Hang Seng Bank (China) Limited HSBC Bank (China) Company Limited Industrial & Commercial Bank of China Ltd Industrial Bank Co., Ltd. Metropolitan Bank (China) Ltd. MUFG Bank (China), Ltd. Ping An Bank Co., Ltd Postal Savings Bank of China Co., Ltd. Shanghai Pudong Development Bank Co., Ltd. Shenzhen Rural Commercial Bank Corp Ltd WeBank Co., Ltd.This publication does not announce a credit rating action. For any credit ratings referenced in this publication, please see the ratings tab on the issuer/entity page on www.moodys.com for the most updated credit rating action information and rating history. Releasing Office: Moody's Investors Service, Inc. 250 Greenwich Street New York, NY 10007 U.S.A. JOURNALISTS: 1 212 553 0376 Client Service: 1 212 553 1653 © 2022 Moody’s Corporation, Moody’s Investors Service, Inc., Moody’s Analytics, Inc. and/or their licensors and affiliates (collectively, “MOODY’S”). All rights reserved.CREDIT RATINGS ISSUED BY MOODY'S CREDIT RATINGS AFFILIATES ARE THEIR CURRENT OPINIONS OF THE RELATIVE FUTURE CREDIT RISK OF ENTITIES, CREDIT COMMITMENTS, OR DEBT OR DEBT-LIKE SECURITIES, AND MATERIALS, PRODUCTS, SERVICES AND INFORMATION PUBLISHED BY MOODY’S (COLLECTIVELY, “PUBLICATIONS”) MAY INCLUDE SUCH CURRENT OPINIONS. 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- Digital Yuan Goes Head to Head With Alipay, WeChat in Beijing
Sep 14, 2021
(Bloomberg) -- Swipe your bracelet, watch or even a walking stick, and you can pay for your goods with digital yuan.
These are just some of the quirky gadgets that China’s central bank, lenders and technology giants are showcasing to Beijing residents ahead of a broader rollout of the e-currency when the city hosts the Winter Olympics in February. The wearable devices, embedded with a digital yuan chip, can be tapped against a scanner, transferring the currency from an e-wallet without needing an internet connection.
The People’s Bank of China is pulling out all the stops to promote the e-currency to a population far more used to transacting on a daily basis using Tencent Holdings Ltd.’s WeChat Pay and Alibaba Group Holding Ltd.’s Alipay. The central bank has rolled out pilot programs in 11 cities and regions from Shenzhen to Hainan so far and has recruited major banks and technology firms to help get an otherwise indifferent population to make the switch to the e-yuan.
Read More: China’s Much-Hyped Digital Yuan Fails to Impress Early Users
Beijing consumers got their first taste of what a digital yuan future might look like during a services trade fair in the capital city last week, which attracted 36,000 visitors. Major banks like Industrial & Commercial Bank of China Ltd. and China Construction Bank Corp. as well as tech firms like Alibaba’s Ant Group Ltd. had booths promoting the e-currency.
Hao Xiujie, a 45-year-old resident of the city, queued for 20 minutes at a booth run by Bank of China Ltd. to sign up for an e-yuan account and get a cup of cappuccino for one cent of the digital currency.
“I’ve always wanted to try the digital yuan and experience how different it is from Alipay and WeChat Pay, after seeing it so much on TV,” she said, as she waited in line for her cup of coffee. “It’s really easy to use, whether it’s paying or topping up.”
Long queues formed at vending machines that take digital yuan to buy stamps, drinks and Winter Olympic-themed souvenirs. A handful of shops including a book store, dental clinic and museum shop set up booths to sell products that could be bought with digital yuan at the fair.
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Li Jun, 36, who works in asset management and had spent 200 yuan ($31) in a free digital-yuan handout in February, said he would prefer digital yuan, which is backed by the central bank, to WeChat Pay and Alipay when it’s officially launched, because he feels it’s safer.
At Ant Group’s booth at the Beijing fair, staff showed visitors how to open the e-CNY wallet through the Alipay app and top-up funds through it. E-commerce giant JD.com Inc also showcased vending machines and self-service payment machines at its booth. Food delivery firm Meituan launched a promotion in nine cities last week that gave out free digital yuan to users who register for shared bike rides.
Bank officials at the fair said it’s no easy job to promote the digital yuan, as its use is still limited in real life and many people still can’t wrap their head around the concept of a virtual legal tender. But the upcoming Winter Olympics will be a key opportunity to popularize the digital yuan, not just among Chinese but also foreign visitors.
At the Beijing trade fair, a staff member at Postal Savings Bank of China Co. demonstrated an ATM-like machine that can take foreign currency notes and convert them into digital yuan stored in a card. China Construction Bank also had a similar machine that allows foreigners to apply for an e-CNY account with their passports and overseas mobile phone numbers.
ICBC showcased a subway turnstile that takes digital yuan by tapping your phone in the same way that Beijing commuters have been using WeChat Pay and Alipay to pay for rides for years.
Staff at the bank also demonstrated a walking stick mounted with a digital yuan chip that enables transactions by near-field communication technology, requiring no internet connection. The device is meant for elderly users who may not have access to smartphone technology, part of the PBOC’s goal of promoting financial inclusiveness.
ICBC has tested over 360,000 application scenarios, and entered strategic partnerships with nearly 60 banks.
The bank is “actively exploring innovative uses of digital yuan in banking, wealth management, investment and financing, as well as securities and asset trading,” a spokesperson said in a statement. “We are building convenient payment and settlement methods around supply chain management, smart transportation and wearable devices.”
Among all the wearable products, credit card-like wallets have been the easiest to promote, according to Fu Jiajie, manager of the technology support department at CEC Huada Eletronic Design Co. Ltd., which manufactures chips used for digital yuan. An official at the Agricultural Bank of China Ltd. said about 2,000 cards have been issued to individuals and companies for the initial phase. Another 30,000 card-wallets will be distributed over the Winter Olympics, according to Fu.
Consumers, merchants and bank officials all agree that it’s critical for the yuan to be used in more ways for it to become popular. PBOC officials have said they won’t use administrative measures to force people to adopt the digital yuan.
“People are already so used to WeChat Pay and Alipay, so many are reluctant to get digital yuan all of a sudden,” said Chen Ling, a 26-year-old staffer at a booth selling Palace Museum’s souvenirs. “Even though it is more convenient than those when you are using it” because of its simpler and easy to use app interface design, she said.
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- Postal Savings Bank of China Co., Ltd. -- Moody's announces completion of a periodic review of ratings of Postal Savings Bank of China Co., Ltd.
Apr 24, 2020
Announcement of Periodic Review: Moody's announces completion of a periodic review of ratings of Postal Savings Bank of China Co., Ltd. Hong Kong, April 24, 2020 -- Moody's Investors Service ("Moody's") has completed a periodic review of the ratings of Postal Savings Bank of China Co., Ltd. and other ratings that are associated with the same analytical unit. The review was conducted through a portfolio review in which Moody's reassessed the appropriateness of the ratings in the context of the relevant principal methodology(ies), recent developments, and a comparison of the financial and operating profile to similarly rated peers.
