Industrial & Commercial Bank of China, Bank of China, Agricultural Bank of China and China Construction Bank, the nation’s four largest banks, plan to add a combined 37,500 graduates this year, according to company officials. Together, they employ 1.3 million people.
A record 6.1 million college students will graduate this year, China’s Ministry of Education estimates. That exceeds the population of Denmark and provides banks with a pool of low-cost labor as they ramp up lending to finance the government’s $585 billion stimulus package.
‘A lot of good talent is available,’ said Sunil Garg, a Hong Kong-based analyst at JPMorgan Chase & Co. ‘China remains probably the only area of growth in the financials’ world.’
ICBC, Bank of China and China Construction, the world’s three largest banks by market value, probably will report higher profits when they post 2008 results next week, according to analysts surveyed by Bloomberg. Beijing-based ICBC may say net income climbed 37% to a record RMB112 billion ($16.4 billion) and China Construction’s profit probably increased 44% to RMB99.7 billion, analysts estimate.
Bloomberg reports that while profit growth at the lenders is forecast to ease this year, they’ve sidestepped the financial calamity that sank Lehman Brothers Holdings and forced Citigroupand Royal Bank of Scotland Groupinto state bailouts.
May Yan, a Hong Kong-based analyst at Nomura International HK. said, ‘For Chinese banks, we are still talking about profit growth, though we’ll see a sharp slowdown. For banks in the U.S. and Europe, we’re talking about solvency and survival.’
Sunil Garg, voted Asia’s best banking analyst in a 2008 Asiamoney poll of brokers, raised his ratings on ICBC and Bank of China to ‘overweight’ on March 12 from ‘neutral,’ saying banks will benefit from increased lending to infrastructure projects as the government tries to reverse an economic slowdown. Every percentage-point increase in loans means an additional 1 percent profit growth for banks, he estimated.
Chinese banks extended RMB2.69 trillion of new loans in January and February, more than half the total for 2008, according to the banking regulator.