China Big 5 Banks' 2012 Profit Seen Up 12% at $121 Billion

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Net profits at China's "big five" banks are expected to have risen nearly 12 percent to more than 750 billion yuan ($120.74 billion) in 2012, the official Shanghai Securities News reported on Thursday.

It also said the average non-performing loan (NPL) ratio at the top banks was likely 0.99 percent in 2012, down 0.1 percent from 2011. NPL provisions at the banks are sufficient to cover 300 percent of estimated NPLs.

China's big five banks are the Industrial and Commercial Bank of China, China Construction Bank, Bank of China, Agricultural Bank of China and Bank of Communications.

They are due to report final 2012 results over coming weeks.

Unidentified industry insiders quoted in the report said credit expansion was the key to the rapid growths in profits. In the last four years, Chinese bank lending jumped to 67 trillion yuan in 2012, up from 32 trillion yuan in 2008.

Insiders expected new loans could hit 8.5 trillion this year, providing further strong support for future profits.

(Read more: China's Big Four Banks' New Loans Rise in January )

The report noted that some foreign investors have expressed scepticism about future earnings at Chinese banks, but said that earnings at the big five are nevertheless expected to increase by 8-10 percent this year along with a rebound in China's economy.

China Merchants Securities told the newspaper that investors should not lose confidence in China's banking industry as a relatively loose monetary policy, a recovery in the economy and strong support from ample liquidity would support the sector.