China's major lenders on Thursday reported they had suffered no or only minor losses from their investment in US mortgage-backed securities.
"The Industrial and Commercial Bank of China did have a loss from the investment if calculated at the current market value of the securities," said Yang Kaisheng, president of the country's biggest lender. "But the loss is not significant and well within ICBC's capacity to bear." Mortgage-backed bonds make up less than one percent of ICBC's total investment in foreign exchange bonds, he said.
Li Lihui, president of the Bank of China (BOC), also a major lender, said his bank had no actual losses from the mortgage-backed and related investment, which accounts for less than four percent of the BOC's total securities investment.
Both banks also said the US securities they held were of high credit ratings. According to the half-year reports released by both lenders on Thursday, aftertax profit of the ICBC soared 61.4 percent from a year earlier to 41.4 billion yuan (US$5.45 billion) and that of the BOC rose 52 percent to 29.5 billion yuan.
"So far, China's financial sector has incurred only limited losses from the US subprime crisis," said Liu Chunhang, an official with the China Securities Regulatory Commission. "Domestic banks have invested only a small amount in the US mortgaged-backed securities and the securities they hold are of high credit ratings," he said.
China's other major lenders have also refuted media reports that they have got involved in the crisis. China Construction Bank said its performance was immune from the crisis as it possessed only a small amount of such securities.
China Merchants Bank, the sixth biggest lender on the Chinese mainland, reported a 13.4-percent yield by selling its US mortgage-backed securities. Both the Bank of Communications and China CITIC Bank denied any purchase of the US mortgage-backed securities.
Source: China Daily Date: 25.08.2007 [82]
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