China Development Bank, Agricultural Development Bank of China and the Export-Import Bank of China, the nation’s three policy banks, delayed the release of their 2020 earnings results, they said in regulatory filings.
The delay, which also occurred last year, is because the review process hasn’t completed, according to statements from China Development Bank and Export-Import Bank of China. Seperately, Agricultural Development Bank said regulators haven’t reviewed its earnings data. The results were originally due before April 30.
The three unlisted policy banks finance state projects and economic and trade development. Their yuan-denominated bonds are popular among foreign investors, who primarily stick to debt sold by the lenders as well as those issued by the central government. The three banks, all wholly owned by the central government agencies, had about 28 trillion yuan ($4.3 trillion) of combined assets and more than 140 billion yuan of total profits in 2019.
“Some investors may raise eyebrows given they are policy banks and important bond issuers,” said Kenny Wen, wealth management strategist at Everbright Sun Hung Kai Co. “Earnings delay will certainly cause some worries, and investors will pay close attention to their bond performances.”
Chinese financial companies’ health has been under the spotlight after the state-owned China Huarong Asset Management Co. missed a March deadline for releasing its 2020 results. Financials was the worst-performing sector in the MSCI China Index on Friday with a 1.7% drop. The CSI 300 Index extended loss Friday afternoon to as much as 1.3% before finishing the session down 0.8%. CDB’s 10-year bond, the most active in China’s interbank market, was steady.
“Market has been weak for quite some time now. Liquidity is tight and people expect it to remain so even amid slowing PMIs,” said Hao Hong, head of research at Bocom International in Hong Kong. “The delay by policy banks to release earnings just added to that sentiment.”
The banks delayed their 2019 earnings releases as well, citing the pandemic, internal work arrangement and unfinished regulatory review. The policy lenders, which were established in 1994 to support the government’s economic goals and are wholly state-controlled, cannot take deposits from individuals and finance their lending activity by issuing bonds.
— With assistance by Jun Luo, Ishika Mookerjee, Jeanny Yu, Sofia Horta e Costa, and Li Liu
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