Agricultural Bank of China Class H ((HK:1288)) has held its Q4 earnings call. Read on for the main highlights of the call.
The recent earnings call from Agricultural Bank of China Class H (ABC) presented a generally positive sentiment, highlighting strong financial performance, robust loan growth, and improved asset quality. Despite facing challenges with deposit growth, non-interest income, and a narrowing net interest margin (NIM), the overall outlook remains optimistic, with the highlights outweighing the lowlights.
Strong Financial Performance
ABC reported a total net profit of RMB222.7 billion for 2024, marking a 4.8% growth. The operating income increased by 2.3% to RMB711.4 billion, while interest income rose by 1.6% to RMB580.7 billion. These figures underscore the bank’s solid financial footing and its ability to generate consistent revenue growth.
Robust Loan Growth
The bank achieved a significant milestone with newly grown loans amounting to RMB2.29 trillion, reflecting a 10.13% increase. ABC led its peers in both corporate and individual loan growth, with individual loan discrepancy at 0.42%, showcasing its strong lending capabilities.
Improved Asset Quality
ABC’s asset quality showed marked improvement, with the non-performing loan (NPL) ratio decreasing to 1.3%, down by 3 basis points from the previous year. The special mention loan ratio also declined by 2 basis points to 1.4%, indicating a healthier loan portfolio.
Capital and Stock Performance
The bank issued approximately RMB320 billion in TLAC and capital bonds, leading to a 1.05% increase in the capital adequacy ratio. Notably, the stock prices of A shares and H shares surged by 55% and 58%, respectively, reflecting strong investor confidence.
Green and Inclusive Finance Growth
ABC’s commitment to green finance resulted in a green bond balance of RMB4.97 trillion, a 22.9% increase. The inclusive finance loan balance grew by over 30% for six consecutive years, reaching RMB4.66 trillion, underscoring the bank’s dedication to sustainable and inclusive growth.
Pressure on Deposit Growth
Despite a deposit growth of around RMB2.2 trillion, ABC faced pressure in this area. The interest-paying ratio increased slightly to 1.56%, highlighting the challenges in maintaining deposit growth momentum.
Challenges in Non-interest Income
The bank experienced challenges in non-interest income, with net fee income showing a slight drop overall. However, there was a marginal improvement of 2 basis points from the previous quarter, indicating some recovery.
Narrowing NIM
ABC’s net interest margin (NIM) narrowed to 1.42%, down by 3 basis points from the second half. This continued pressure on NIM reflects the broader challenges in the interest rate environment.
Forward-looking Guidance
Looking ahead, ABC’s Vice President Wang Wenjing provided a positive outlook for 2025, driven by supportive monetary and fiscal policies, infrastructure investment, and a stable consumption environment. The bank aims to enhance financial services to agriculture and rural areas, with county-level growth exceeding RMB1 trillion. ABC’s green finance strategy and advancements in fintech, pension finance, and digital finance are expected to further strengthen its role in serving the real economy.
In conclusion, the earnings call from Agricultural Bank of China Class H painted a positive picture of the bank’s financial health and strategic direction. Despite facing certain challenges, the strong financial performance, robust loan growth, and improved asset quality set a solid foundation for future growth. Investors can remain optimistic about ABC’s ability to navigate the evolving financial landscape.