China's four largest publicly traded banks need at least 480 billion yuan of additional capital to fund loan growth and comply with regulatory requirements for financial strength over the next five years, ICBC President Yang Kaisheng wrote in an article published in the 21st Century Business Herald in April.
ICBC, Bank of China Ltd. and Bank of Communications Co. have announced plans to raise 107 billion yuan by selling bonds and shares this year. Construction Bank said yesterday it plans to raise as much as 75 billion yuan in a rights offering in Shanghai and Hong Kong.
ICBC boosted the provision coverage ratio to 180 percent while Construction Bank increased the ratio to 192 percent, compared with the 150 percent required by the nation's banking regulator. The proportion of non-performing loans at both banks dropped to 1.35 percent.
The biggest challenge to "the industry right now is whether the government can manage asset bubbles without tightening too much and hurting the economy," said Li Ming, a portfolio manager at Dacheng Fund Management Co., which oversees about $15 billion in Shenzhen. China's economic growth accelerated to 11.9 percent in the first quarter, the fastest pace in almost three years.
Eoin Treacy's view The
more aggressive stance taken by the Chinese government on containing property
prices together with other tightening measures is acting as a brake on the stock
market with the Shanghai A-Shares remaining one of this year's laggards. Increased
supply is one of the market's primary headwinds and with banks now seeking an
additional 480 billion Yuan, more time will probably be needed to work through
this additional inventory.
The Shanghai A-Shares market encountered resistance in the region of the 200-day moving average earlier this month and retested the February low near 3000 this week. An upward dynamic is now required to signal demand is returning and to offset scope for a further test of underlying trading.
The H-Shares Index (HSCEI) lost upward momentum from November and continues to range below 14,000. It retested the 200-day moving average this week, currently near 12,000, and a sustained move above the mid-April high near 13,200 would be required to indicate demand has regained the upper hand.