BANKS ON A ROLL

2014/12/9

From：Macau Business Daily

They’ve had a very good year. Banks here have posted an operating profit of MOP9.5 billion for the first three quarters. That’s an almost 37 per cent y-o-y rise.

Banks in Macau continue to amass the profits of the booming economy as credit and deposits grow in excess of 30 per cent, despite the current slowdown of gaming revenues and the first recession in years likely to happen this quarter. Banks here are profiting 50 per cent more than last year and double that of 2012, in sharp contrast to what’s happening in the casinos.
According to data released by the Monetary Authority of Macau (AMCM) last Friday, the operating results of banks here totalled MOP9.5 billion from January to October, a 36.8 per cent rise compared to the same period last year. The operating result is the profit made in the current year before taxes, interest and excluding one-off operations are included.
The banking sector in Macau has posted solid growth in recent years as the institutions finance new businesses and grant bigger loans for housing. The arrival of thousands of non-residents here has also helped fuel the deposit bonanza. In the last two years, the banking sector grew more than the gaming industry and the economy as a whole. In the first 10 months of 2013, the operating results of banks reached MOP6.9 billion, almost 50 per cent less than this year. In 2012, banks here made a profit of MOP5 billion (January to October period) or half of what they’re making today.

Credit flow

AMCM data also shows that in October deposits by residents and non-residents remained flat from September but registered a strong increase from a year ago. Deposits by non-residents amounted to MOP233.8 billion, a 0.4 per cent decrease from the previous month but a 38.5 per cent jump compared to the same month last year. Resident deposits reached MOP479.2 billion, growing 0.4 per cent from September and 9.7 per cent from October 2013. Deposits made by the government also went up, rising 2.2 per cent sequentially and 16.9 per cent year-on-year, AMCM reported. Public Sector deposits amounted to a total of MOP323 billion.
Loans granted by banks also posted a good performance two months ago. Domestic loans to the private sector grew 32.8 per cent to MOP331 billion year-on-year, while external loans accelerated 31.5 per cent to MOP348 billion.
Banks in Macau continue to show a low loan-to-deposit ratio compared to international standards. The ratio for the resident sector in October rose 0.1 percentage points from the previous month to 58.3 per cent. The ratio for both resident and non-resident sectors also increased by 0.3 percentage points to 84.7 per cent. According to major financial institutions an 80 to 90 per cent loan-to-deposit ratio is the benchmark. Above this ratio, banks are adopting a risky position by lending too much. If it’s lower, banks could make more money from its clients and increase lending.
In October, currency in circulation and demand deposits jumped 3 and 6.1 per cent, respectively, AMCM also reported.

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