latest-news-headlines Market Intelligence /marketintelligence/en/news-insights/latest-news-headlines/44162505 content
BY CONTINUING TO USE THIS SITE, YOU ARE AGREEING TO OUR USE OF COOKIES. REVIEW OUR
PRIVACY & COOKIE NOTICE

Login to Market Intelligence Platform

New User / Forgot Password


Looking for more?

Contact Us

Request a Demo

You're one step closer to unlocking our suite of comprehensive and robust tools.

Fill out the form so we can connect you to the right person.

  • First Name*
  • Last Name*
  • Business Email *
  • Phone *
  • Company Name *
  • City *

* Required

In this list

Net interest margins of Chinese banks expected to further improve in 2018

Energy

Power Forecast Briefing: Fleet Transformation, Under-Powered Markets, and Green Energy in 2018

S&P Global Market Intelligence: Who We Serve

Banking, Corporations, Insurance, Professional Services

The Market Intelligence Platform Experience

Technology, Media & Telecommunications

Spotify’s Direct Listing Gamble Pays Off


Net interest margins of Chinese banks expected to further improve in 2018

Net interest margins at China's national banks are expected to further improve in 2018 thanks to rising yields on new loans and stabilizing deposit rates.

In 2017 China's biggest lenders recorded increases in their net interest margins, or NIM, helping their combined net profit reach 893.68 billion yuan, 4.1% higher than 2016's 858.23 billion yuan. At Industrial & Commercial Bank of China Ltd. and China Construction Bank Corp., NIM was 2.22% and 2.21%, respectively, compared with 2.16% and 2.20% in 2016. Agricultural Bank of China Ltd.'s NIM rose to 2.28% from 2.25%.

Meanwhile, Bank of China Ltd.'s NIM rose to 1.84% from 1.83%. Zhang Qingsong, the lender's executive vice president, told a March 29 press conference in Beijing that amid climbing market interest rates in China and the Federal Reserve's rate hikes in the U.S., Bank of China used 2017 to focus on managing its assets and liabilities, increasing the proportion of both mid- and long-term loans as well as low-cost demand deposits.

Across the sector, yields on new loans began picking up in 2017 due to tightened market liquidity and rising market rates in China, said Chen Shujin, head of financial research at Huatai Securities in Hong Kong.

While the process of replacing existing loans with new loans will be gradual, "Chinese banks' NIM will keep benefiting from increasingly high new-loan yields," Chen said.

On the liability side, the four biggest banks and joint-stock banks faced diverging fates in 2017 given their different liability structures, but they are all expecting higher NIM this year, said Liao Zhiming, chief China banks analyst at TF Securities in Beijing.

Unlike the rapid pickup last year, market rates in China have been steady this year, stabilizing the liability costs of Chinese banks, Liao said.

About half of all deposits at the four biggest banks' are demand deposits, whose rate is less sensitive to market rate movements than time deposits and interbank products. That makes their asset yields rise faster than liability costs, Chen said.

What's more, "joint-stock banks are less reliant on demand deposits but more on high-cost interbank borrowing than the big four," Chen explained.

Tightened market liquidity had been affecting the interbank market before yields for new loans recovered, Chen added. She noted that after interbank borrowing costs started to rise, banks slowly began issuing new loans with higher yields to help boost NIM.

The Chinese government's efforts to crack down on shadow banking also has led to some joint-stock banks like China CITIC Bank Corp. Ltd. and China Minsheng Banking Corp. Ltd. actively shrinking their balance sheets by cutting back on interbank business last year, thus eating into NIM, Liao said.

"The deleveraging impact was more profound in 2017 and will gradually diminish this year," he noted.

As of April 12, US$1 was equivalent to 6.29 Chinese yuan.

SNL Image

SNL Image

SNL Image

Find out how historical estimates have fared compared to actual reported numbers by accessing the Surprise page in the estimates section of a company's profile. Here is an example for Bank of China.

Visit the financial page for a specific company to view trend charts using a metric by clicking on the down arrow button beside the line item name and select View Chart.


Watch: Power Forecast Briefing: Fleet Transformation, Under-Powered Markets, and Green Energy in 2018

Steve Piper shares Power Forecast insights and a recap of recent events in the US power markets in Q4 of 2017. Watch our video for power generation trends and forecasts for utilities in 2018.


Watch: S&P Global Market Intelligence: Who We Serve

At S&P Global Market Intelligence, your workflow is our focus. Partner with us as we set the markets in motion. 


Watch: The Market Intelligence Platform Experience

At the heart of Market Intelligence is a financial data and analytics business serving up best-in-class, highly relevant content, and powerful software tools to a range of customers. In this video, President Mike Chinn shares why he's excited about the Market Intelligence platform and why it's tranformational for all of S&P Global. 


Technology, Media & Telecommunications
Spotify’s Direct Listing Gamble Pays Off

Highlights

Spotify Technology SA shares rose 13% above its $132.00 reference price to close at $149.01 the day of the company’s IPO April 3, resulting in a public market valuation of 4.0x estimated 2018 revenue of €5.22 billion and 16.5x gross profit of €1.28 billion.

Apr. 06 2018 — The following post comes from Kagan, a research group within S&P Global Market Intelligence. To learn more about our TMT (Technology, Media & Telecommunications) products and/or research, please request a demo.

Spotify Technology SA shares rose 13% above its $132.00 reference price to close at $149.01 the day of the company’s IPO April 3, resulting in a public market valuation of 4.0x estimated 2018 revenue of €5.22 billion and 16.5x gross profit of €1.28 billion. That compares to a trading multiple of just 1.0x revenue for Pandora as of the same date, but Spotify’s higher trading multiple is justified by its higher proportion of paying subscribers among its listeners and its growth outside the U.S.

Spotify Technology is the parent of Spotify AB, the Swedish operator of the popular Spotify streaming service.

Company guidance for full year 2018, provided in Spotify's March 26 8-K filing, is revenue of €4.9 billion to €5.3 billion, up 20% to 30% year over year, and a gross profit margin of 23% to 25%, with an operating loss of €230 million to €330 million including an estimated total cost for the direct listing of roughly €35 million to €40 million in the second quarter.

Spotify Technology S.A. share price and market capitalization

The 8-K also shows Spotify has ambitious monthly active user, or MAU, and premium subscriber growth targets for 2018, with MAUs projected to increase by 26% to 32% year-over-year to 198 million to 208 million and total premium subs growing 30% to 36% to a range of 92 million to 96 million.

At the end of 2017, Spotify had reported 157 million MAUs and 71 million premium subs. Apple Music came in second place with a reported 36 million subs as of February 2018; based on reports from the Wall Street Journal, the company is growing at a monthly rate of 5% compared to 2% at Spotify. According to a Forbes article on April 4, Apple Music just reached 40 million paid subscribers.

Amazon.com Inc. has indicated it is the third-largest on-demand streaming music company behind Spotify and Apple Inc.'s Apple Music with a reported 16 million subscribers between Prime Music and Amazon Music Unlimited. That leaves Pandora Media Inc. in fourth place with 5.5 million paid subscribers, although it has a larger ad-supported user base with 74.1 million MAUs reported at the end of 2017.

Based on reports by Music Business Worldwide on April 4, Sony Corp.'s Sony Music, which had owned 5.71% of Spotify shares prior to the first day of trading, sold 17.2% of its stake in the company, representing a little less than a 1% total share, for over $250 million based on the April 3 closing price of $149.01.

In Spotify's prospectus filed April 3, Sony Music, before the April 3 shares sale in the first day of Spotify trading, was the fifth-largest shareholder behind Spotify co-founders Daniel Ek (27.1%) and Martin Lorentzon (13.1%), followed by Tencent Holdings Ltd. (9.1%) and Tiger Global (7.2%).

As reported by Music Business Worldwide, according to a memo released by Sony, the company projects that the unrealized valuation gain and the proceeds from the sale of Spotify shares will amount to roughly 105 billion Japanese yen, approximately US$1 billion, for the first quarter of the fiscal year ending March 31, 2019.