The banking sector was one of the best-performing sectors in the local stock market yesterday, with Bank of China (Hong Kong) (2388) jumping nearly 10 percent and mainland banks rising over 2 percent despite pressure on their net interest margins.
Bank of China (3988) said yesterday that its net interest margin - a key gauge of profitability - will still face significant pressure this year.
Vice President Zhang Yi made the remarks in an earnings press conference yesterday.
Reductions to the benchmark lending rate earlier this year and existing mortgage rates last year have impacted returns from the asset side, said Zhang.
"We'll strive to reduce high-cost deposits this year," he added.
Sheng Liurong, chief finance officer of China Construction Bank (0939), also said the lender will further control costs from deposit interest rates to ease pressure on profitability.
There's room for further cuts to the benchmark lending rates this year, he added.
Meanwhile, both BOC and CCB said debt exposure to the Chinese real estate sector remained under control.
This came after five of China's largest lenders posted shrinking net interest margins last week. On Thursday, CCB, BOC and Agricultural Bank of China (1288) all reported sliding margins in their annual results despite a rise in profits.
Shares of BOCHK jumped 9.6 percent yesterday thanks to its increased profit and dividend payouts last year. CCB rose 2.8 percent while BOC closed nearly 2 percent higher.
BOC president Liu Jin, center, Zhang Yi, second right, and other executives announce the results. Sing Tao
