Banks in China entering zero profit growth era
PwC cautioned that listed banks must keep an eye on further deterioration in non-performing loans and overdue loan levels. At the same time, they should look to pursue more capital-light businesses, such as intermediary dealings, that will not require as much capital.
James Tam, financial services partner at PwC Hong Kong, said the industry’s biggest banks will likely see persistent capital pressure as new global banking regulations are rolled out over the next two to three years.
For unlisted banks with more vulnerable balance sheets, PwC said they should evaluate the possibility of listing as a means of bolstering their capital at the earliest opportunity.
This is despite the fact that many mainland Chinese banks are still holding out for prospects of listing on the domestic A-share market where they would likely receive higher valuations than those they would receive from sceptical overseas investors if they choose to list in Hong Kong.
PwC believes four to six small to medium-sized mainland banks will probably end up listing in Hong Kong. ■