|Bid||4.8900 x 0|
|Ask||4.9000 x 0|
|Day's Range||4.8800 - 4.9200|
|52 Week Range||4.8800 - 6.0500|
|Beta (5Y Monthly)||0.67|
|PE Ratio (TTM)||6.04|
|Earnings Date||Oct. 23, 2020 - Oct. 27, 2020|
|Forward Dividend & Yield||0.26 (5.33%)|
|Ex-Dividend Date||Jun. 30, 2020|
|1y Target Est||6.75|
(Bloomberg) -- A massive push by China’s biggest banks to boost capital amid the worst downturn in at least a decade faltered out of the gate.Industrial & Commercial Bank of China Ltd. slashed a planned bond sale of the riskiest type of debt by more than a third, raising only $2.9 billion in dollar-denominated bonds out of a planned $4.4 billion.Some of China’s biggest lenders are trying to raise at least $29 billion in bonds this month to shore up capital as profits slide and bad debt balloons. Banks are being enlisted by the government to provide cheap loans to millions of businesses and consumers struggling with the fallout of the pandemic, triggering the worst earnings slump in a decade.The sale by ICBC, the world’s largest bank by assets, was likely hampered by the competition from a jump in Chinese dollar debt sales, which have contributed to a record amount of global issuance this year. The Additional Tier 1 bonds priced at a yield of 3.58%, which was just below what rival Bank of China issued debt at earlier this year, according to Pramod Shenoi, head of APAC research at Creditsights.“Achieving a tighter coupon may have been more important for the issuer,” Shenoi said. “We’ve seen that investors have had less cash to put to use more recently -- they have allocated their cash and cash levels are low -- so overall supply would have used up their cash.”ICBC declined to comment on the sale.Even at the reduced size, the Beijing-based bank’s offering is the biggest of its kind by a Chinese lender since Postal Savings Bank of China Co.’s $7.25 billion bond in 2017, according to data compiled by Bloomberg. It’s also the first offshore AT1 deal from ICBC in six years. The notes typically pay a higher yields than regular debt since they stand first in line for losses if the issuer goes bust.“There are also concerns that this may not be the best time to be in longer maturity assets if the treasury curve continues to steepen,” said Thu Ha Chow, a portfolio manager at Loomis Sayles Investments Asia Pte. “Chinese banks are supporting the real economy during this pandemic and are expected to take some credit losses, so capital buffers will need to be replenished.”While they meet minimum domestic capital requirements with a safe margin, China’s four biggest banks face a shortfall of $220 billion to meet global capital rules kicking in at the start of 2025, S&P Global Ratings said in a report last month. That gap may increase to more than $900 billion over the next few years as economic pressure weighs on earnings, S&P said.Harry Hu, a Hong Kong-based analyst at S&P Global, said the whole industry is in need of capital.“The reason is because of high credit growth and there’s slowing profitability,” he said. “Credit growth is high this year, higher than what we originally expected. We were looking at about 13% loan growth or maybe slightly more.”(Updates with fund manager comment in the eighth paragraph.)For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
(Bloomberg) -- Chinese banks are planning near record bond sales this month to replenish capital levels weakened by a surge in cheap loans to struggling businesses and sliding earnings.Industrial & Commercial Bank of China Ltd., the world’s largest lender, and three domestic competitors plan to sell a combined 195 billion yuan ($28.5 billion) of perpetual or tier-2 capital bonds in September, said people working on the plans who asked not to be named discussing internal matters. Their issuance alone would amount to the second highest monthly sales ever in China, according to data compiled by Bloomberg.Enlisted to ease the financial hardship of consumers and businesses hurt by the coronavirus pandemic, Chinese banks are under increasing stress. Authorities have called on them to forgo 1.5 trillion yuan in profit by providing cheap funding, deferring payments and increasing lending, eroding their capital buffers as they struggle with a record pile up of non-performing loans.“Banks need to make long-term preparations to stabilize their asset quality, hence comes the demand to replenish both tier-1 and tier-2 capital,” analysts led by Zhang Jiqiang at Huatai Securities Co. wrote in a report last month. “NPLs will probably continue to rise.”While they still currently meet minimum domestic requirements with a safe margin, China’s four biggest banks face a shortfall of $220 billion to meet global capital rules kicking in at the start of 2025, S&P Global Ratings said in a report last month. That gap may increase to more than $900 billion over the next few years as economic pressure weighs on earnings, S&P said.This month alone, ICBC and China Guangfa Bank Co. aim to issue 60 billion yuan and 45 billion yuan of tier-2 bonds, respectively, said the people. Bank of Communications Co. plans to raise 30 billion yuan from a perpetual bond sale, while Postal Savings Bank of China Co. is seeking to sell 60 billion yuan, they said.The planned sales are part of the broad fundraising plans proposed by the banks to their board and shareholders earlier. Some of the issuance is pending regulatory approval, said one of the people, which may delay the timing of the sale.ICBC declined to comment. Bank of Communications and Guangfa Bank didn’t immediately respond to requests seeking comments. Postal Savings Bank said in a text message it will choose an appropriate window for the offering.Investor enthusiasm for the debt deluge may be limited. Weakening demand, as reflected in sliding prices on subordinated notes, doesn’t bode well for new issues, according to the Huatai analysts.The price of Agricultural Bank of China Ltd.’s 4.28% perpetual bond declined to a one-year low this month and a similar 3.69% note issued by Postal Savings Bank at the end of last month slid to the lowest level since it was issued in March, trading at 96.84 of its 100 face value.Policy makers have acknowledged concerns over capital at the banks. Xiao Yuanqi, a spokesman of China’s banking regulator, told a press briefing last week that no matter how the pandemic and the economy develop, it will ensure a solid capital foundation. Liu Guoqiang, the deputy central bank governor, said at the same briefing that the People’s Bank of China is working with various departments to ensure banks have enough capital.For more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.
China's largest state-owned banks are readied for rising bad debt and increased margin pressure in the months ahead as forbearance policies designed to give borrowers breathing space during the coronavirus crisis expire. "The external challenges in the second half are unprecedented," Bank of China Ltd (BoC) President Wang Jiang said on Monday. Second-quarter loan-loss provisions were up 61% to 436% compared to the same period last year at ICBC, CCB, AgBank and BoC, data from China International Capital Corp (CICC) showed.