BEIJING : An expected pick-up in loan demand in China this year from both companies and households will ease pressure on net interest margins of banks as they emerge from a pandemic-induced economic slowdown, analysts and bankers said.Chinese banks' net interest margins, a key measure of profitability, ca
BEIJING : An expected pick-up in loan demand in China this year from both companies and households will ease pressure on net interest margins of banks as they emerge from a pandemic-induced economic slowdown, analysts and bankers said.
That should help Chinese banks' net interest margins - interest earned from loans compared with interest paid out on deposits - and, in turn, their profitability at a time when lenders in the West are set to take a hit from weaker economies. As Beijing's fiscal policy support takes effect and business activities pick up gradually, net interest margin of the banking sector is expected to rebound in the second half of the year, said Wang Yifeng, a banking analyst at Everbright Securities Co.
"Credit expansion will continue during the process of gradual recovery of the economy," Wang said."Along with government policies stabilising the economy taking effect, the banking sector hopefully can achieve stronger gains." Bankers said they were betting on a bounce back this year in household loans - mostly mortgages - as consumption is expected to surge, with some banks raising their retail lending targets. There are tentative signs that new home sales across various cities have risen sharply as sentiment improves.
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