China Merchants Bank (3968.HK) reported its third consecutive quarter of falling earnings and missed analysts estimates by 20%. From Bloomberg:
Net income fell 41 percent to 4.1 billion yuan ($600 million) in the second quarter, from 6.93 billion yuan a year earlier, based on figures released by the Shenzhen-based company. That fell short of the 5.1 billion yuan average estimate of six analysts in a Bloomberg survey.Financials have underperformed off their 52-week lows and China Merchants climbed just 100% off its bottom. There are a few sub-100% rebounds on my watchlist, but most are in the range of 100%-300%, with a couple of 900% outliers in Comba (2342.HK) and Hildi Industry (1393.HK)
President Ma Weihua, who introduced the nation’s first credit card and helped boost profit sevenfold since 2004, faces more challenges during an economic slowdown because of the bank’s focus on loans to home buyers and smaller firms. The profit decline was the steepest among China’s six largest publicly traded banks.
“The profit plunge is mainly due to margin contraction,” said Sheng Nan, analyst at UOB Kayhian Investment Co. in Beijing. “With funding costs expected to decline in the second half, China Merchants’ profitability will improve.”
Lehman Brothers fallout continues in Hong Kong:
Six listed banks have made a combined provision of HK$1.1 billion for the first half of this year to cover refunds to investors who bought Lehman minibonds.Speaking of Lehman Brothers, too bad I didn't add it to the OTB Portfolio. On Friday, LEHMQ.PK was gunned to $0.15 on 73 million shares, a 200% advance. It had traded for $0.04 or $0.05 for the past five months, with a few brief pops up and volume around a few million a day.
But that represents only 17.46 per cent of the total HK$6.3 billion settlement agreed by 16 lenders last month with the Securities and Futures Commission and the Hong Kong Monetary Authority.
Including the provision made last year, the six lenders have paid a total of HK$1.78 billion, representing 28 per cent of the total.
The agreement called for the banks to repay customers at least 60 per cent of their initial investment in the minibonds guaranteed by Lehman. Those who made individual settlements earlier below the threshold will receive a top-up.
Finally, China Southern Airlines reported a 97% drop in first half earnings (ZNH). Other airlines earned a profit from fuel hedges, but China Southern exited its hedges last year.