And the great Chinese credit bubble leap forward continues, with Tuesday’s datapoint coming from Bank of China.
After all, the bank led the charge on Tuesday with some really not too shabby results. As BusinessWeek reported:
Bank of China Ltd., the nation’s third-largest lender by market value, posted a more than fourfold increase in fourth-quarter profit, helped by a credit boom and lower impairment losses on assets.
Net income climbed to 18.87 billion yuan ($2.8 billion) from 4.42 billion yuan a year earlier, based on subtracting nine-month profit from full-year earnings reported by the Beijing-based lender today.
Hot stuff. The bank published its results at the end of a veritably molten trading day on Shanghai’s exchange, which (as Reuters reported) closed at a three-week high.
But is everything quite so toasty? By contrast, the Hang Seng eased on earlier gains at its close, as Hong Kong investors seemed to be rather more cautious about the week’s big bank results. That might reflect uncertainty over whether official plans to restrain lending will work.
Uncertainty indeed. True, Bank of China had already committed itself on Tuesday to restraining future lending, according to the WSJ. Rather big news for one of the world’s largest lenders. However – what’s this, from Reuters?:
Bank of China, China’s fourth largest bank, said on Tuesday it was in talks with Temasek Holdings, Singapore’s sovereign wealth fund, to set up a rural business bank in China.
The bank under discussion would have 40-60 branches, President Li Lihui told reporters at a media briefing to discuss Bank of China’s 2009 results.
Hmm. BusinessWeek had the story previously, on which Temasek declined comment.
Temasek is a carefully diversified investor as a SWF, and rural banks in China are restricted from non-agricultural lending. But it would be rather nasty if a Chinese credit bubble was allowed to spill over into more sedate 沈著的;安靜的;平靜的;嚴肅的 Asian markets in the rush to innovate elsewhere.
Zhou Xiaochuan and company may have their work cut out.
Related links:
China’s metropoli bubble fear – FT Alphaville
China’s liquid real estate bubble – FT Alphaville
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