More testing year for Chinese banks in 2008

by Richard Kilner

Story link: More testing year for Chinese banks in 2008

Chinese banks are set for a testing year, according to Fitch Ratings’s senior director Charlene Chu.

The warning comes after China’s banks enjoy an excellent year in 2007, but 2008 could see a combination of a worldwide slowing and a domestic tightening of monetary policy.

Chu explained, at a teleconference, that a mixture of factors, including a weak real estate market in China and stricter quotas for state credit, would make life more difficult for Chinese banks this year.

Although growth is predicted to fall from last year’s very strong performance, Chu nevertheless expects good growth in earnings.

A relatively small number of Chinese banks are exposed to financial fallout from the subprime mortgage crisis and credit crunch, though there are some concerns about disclosure of such difficulties.