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Strategies & Market Trends : Greater China Stocks

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From: Julius Wong3/28/2011 8:01:41 AM
   of 8334
 
China's Banks—It Ain't Pretty But It Works
By TOM ORLIK

China's banks are strange beasts. The government is their main shareholder; regulators set a ceiling on deposit rates and a floor on lending rates; and loans can be dictated as much by political as financial logic.

But as Western governments also are up to their elbows in the banking sector, the Chinese model no longer looks quite as strange as it once did.

And, for now at least, China's banks are delivering growth for the economy and a return for investors.

...

Unlike some big international banks, the Chinese model is fairly straightforward: Take in deposits and make loans. With the ceiling for deposit rates and the floor for lending rates set by the government, the net interest margin is currently 3.06 percentage points.

online.wsj.com;
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