S&P Global Market Intelligence offers our top picks of banking news stories and more published throughout the week. Please note that some entries may have links to third-party sources that require a subscription.
India to merge 10 public sector banks into four entities
* India's government plans to consolidate 10 public sector banks into four entities, a move that will bring the number of public sector banks down to 12, The Economic Times reported. Among the planned mergers is Punjab National Bank merging with Oriental Bank of Commerce and United Bank of India to create the country's second-largest lender with an 18-trillion-rupee business.
* Singapore-based United Overseas Bank Ltd. subsidiary UOB Asset Management Ltd. completed its purchase of a 75% stake in Indonesia's PT PG Asset Management.
Earnings roundup
* Three Chinese banks saw increased profits for the first half. Agricultural Bank of China Ltd. posted a 4.9% year-over-year increase in net profit for the half ended June to 121.45 billion yuan from 115.79 billion yuan. Bank of China Ltd.'s net profit rose 4.55% to 114.05 billion yuan from 109.09 billion yuan. China Minsheng Banking Corp. Ltd. posted a 6.77% increase in net profit, partly attributed to a higher net interest income.
* Bank of Jinzhou Co. Ltd. reported a net loss of 4.54 billion yuan for the year ended Dec. 31, 2018 amid higher provisions for impairments, a greater balance of nonperforming assets and the adoption of the IFRS 9 accounting standard. The reported annual loss was a steep drop from the company's 2017 net income of 9.09 billion yuan.
* BOC Hong Kong (Holdings) Ltd. reported a 2.2% year-over-year increase in net profit for the first half to HK$17.95 billion from HK$17.56 billion.
* Malaysia's Maybank Islamic Bhd. saw its net profit for the second quarter ended June rise 7.8% year over year to 528.6 million Malaysian ringgit from 490.4 million ringgit.
* Taiwan Financial Holding Co. Ltd.Ltd.'s consolidated net income for the fiscal second quarter surged 95.61% to NT$13.36 billion, from NT$6.83 billion in the prior-year period.
Chinese banks look ahead
* Bank of China Ltd. is looking to noninterest income and overseas markets for growth, as its margins remain under pressure due to the country's interest rate reform and slowing economic growth, said Vice President Wu Fulin during an earnings call. The bank plans to step up innovations in financial products and improve financial services to reduce its "over-reliance" on interest income.
* Huishang Bank Corp. Ltd. expects profitability to improve further in the second half, after the lender posted a year-over-year rise in net interest margin in the first half due to its focus on an economically robust province. Chairman Wu Xuemin said at an earnings briefing in Hong Kong Aug. 30 that the bank expected to benefit from strong economic growth in Anhui province and the ongoing Yangtze River Delta integration.
* Bank of Chongqing Co. Ltd. expected net interest margin to improve further in the second half despite the government's introduction of new benchmark rates, said Li Cong, general manager of the bank's asset and liability management department.
Regulatory, legal developments
* The Reserve Bank of India is requiring banks to link retail, small and midsize enterprise loans to an external benchmark to allow for the faster transmission of rate cuts.
* South Korea's Financial Services Commission eased financial technology investment guidelines, making it easier for licensed financial institutions to invest in fintech companies. The regulator will change the scope of fintech permitted for investment to a negative list from a positive list, allowing financial institutions to invest in any area of fintech unless specifically prohibited.
* The Australian Securities and Investments Commission sued Bank of Queensland Ltd. and Bendigo & Adelaide Bank Ltd. for allegedly applying unfair terms in their lending contracts with small businesses. ASIC claimed that some terms used in their contracts with small businesses cause a significant imbalance in the parties' rights and obligations and are not reasonably necessary to protect the banks' legitimate interests.
* India's Yes Bank Ltd. paid about 5.2 million rupees to settle a case involving the Securities and Exchange Board of India's allegations that it selectively disclosed portions of the central bank's risk assessment report in February.
In other news
* Moody's placed the long-term deposit ratings of 14 Japanese banks on review for a downgrade. The rating agency said the action is driven by the inability of Japanese banks to maintain profits without taking on more risk amid a challenging operating environment in the country.
* Sumitomo Mitsui Trust Bank Ltd. established a Sydney office to strengthen its Australian infrastructure loan operations, The Nikkei reported.
* Bank of Jinzhou's board proposed to cancel dividend payments on the bank's offshore preference shares for the year through Oct. 26 after its capital adequacy ratios as of Dec. 31, 2018, failed to meet regulatory requirements.
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