China’s chill hits banks’ bottom lines
Unable to shrug off its disappointing performance of the preceding year, Asia’s financial sector registered a second straight year of decline in its bottom line in 2016. Net profit for the sector came in at $173.1 billion, a decline of 8.8% compared to 2015 and greater than the overall decline in net profit seen by all companies on the Nikkei Asia300 Index. For Singaporean banks, which were among the hardest hit, the main drag came from the fall in commodity prices. All three of the city-state’s major lenders posted a year-on-year drop in net profit in 2016, which translated to an overall fall of 5% for the local banking sector, both in dollar and local currency terms. Exposure to the oil and gas sector meant the banks had to book higher specific provisions for bad loans, as a number of offshore service players ran into financial difficulties over the last year.
