Citic’s 3Q Revenue Rebounded Mildly on Accelerating Loan Expansion in Corporate Sector

No-moat China Citic Bank, or Citic's third-quarter results reflected significant industrywide headwinds, including sluggish retail credit demand, falling asset yield and rising capital market volatility. However, the bank's financial data showed marginal improvement during the quarter. Growth in the first-three-quarters total revenue, pre-provisioning operating profits, and net profits further improved to 3.4%, 1.5% and 12.8% against the year-ago period, up 0.7, 0.4 and 0.8 percentage points from the first half. The improvement was attributable to accelerating loan growth, mild recovery in fee income, and lower provisioning against the year-ago period. Leveraging its solid customer base of large state-owned enterprises, CITIC's loan book increased 7.3% year on year. The stronger asset growth and mild recovery in fee income translated to better earning resiliency for the bank compared with the previous quarter. However, first-nine-month net interest margin, or NIM narrowed 3 basis points from the first half level on higher credit allocation to corporate loans.