Sinopec’s net profit came in at 32.4bn yuan ($5.0bn) last year, compared with 46.5bn yuan in 2014, according to a statement filed to the Shanghai exchange late Tuesday.
However, it beat the 29.97bn yuan profit mean estimate in a survey of analysts by Bloomberg News.
“In 2015, the global economic recovery remained weak and (the) Chinese economy maintained steady growth with (gross domestic product) up by 6.9%,” the company statement said.
“International oil prices were under downward pressure while fluctuating to new lows.”
Energy firms around the world have taken a heavy hit in recent months as the price of crude plunges—approaching 13-year lows in February—owing to a global supply glut and overproduction.
At the same time China’s economic growth has slowed, coming in at its weakest pace in a quarter of a century last year.
Sinopec’s revenue dropped 28.9% year-on-year to 1.98bn yuan, according to the statement.
Two other Chinese oil majors, PetroChina and offshore operator CNOOC, both registered net profit declines of more than 66% last year. Analysts said Sinopec’s refining business helped cushion it from the impact of lower crude oil prices.
PetroChina, the country’s biggest energy firm, posted its lowest profit since 1999 with earnings tumbling 66.7% year-on-year to 35.65bn yuan.
“If you compare earnings with PetroChina and CNOOC, Sinopec has done the best and will remain to be the most defensive oil stock,” Gordon Kwan, head of Asia oil and gas research at Nomura Holdings in Hong Kong, told Bloomberg.
Sinopec’s crude oil output dropped 3.1% to 349.47mn barrels in 2015.
Foxconn
Taiwan’s Foxconn posted its first fall in quarterly net profit in more than two years yesterday as the main assembler of Apple’s iPhones felt the effects of a maturing smartphone market and slower global tech demand.
Foxconn’s 6.7% fall in fourth-quarter net profit came as it announced a takeover of ailing Japanese electronics maker Sharp Corp, which analysts expect will depress earnings for two to three years.
Foxconn, formally known as Hon Hai Precision Industry Co, booked T$52.9bn ($1.6bn) in net income on a 4.7% drop in revenue in the October-December period from a year earlier, it said in a statement.
The quarterly result beat average net profit forecast of T$50.46bn from 12 analysts polled by Thomson Reuters I/B/E/S and was the company’s second-highest quarterly level.
Analysts noted prior to the results that the company had managed to improve production efficiency and benefit from higher average selling prices for large-screen iPhones.
For all of last year, net profit reached T$146.9bn, up over 12% to a record annual high.
Capitec Bank
South African lender Capitec Bank Holdings reported a 26% rise in full-year profit yesterday, in line with its forecast, as growth in client numbers boosted both interest and transaction fee income despite a feeble economy.
Capitec, which grants loans not supported by assets, said it gained 1mn active clients, to total 7.3mn customers, over the past year as growth of less than 2% in Africa’s most advanced economy forced thrifty South Africans to shop around.
“This economy gives us a huge advantage,” Capitec Chief Executive Gerrie Fourie told Reuters, adding that the lender’s business model had been successful at luring clients from more established banks such as Nedbank, Barclays Africa , Standard Bank and FirstRand.
Around 200,000 high income clients have flocked to Capitec over the last year alone, helping lift its transaction fee income by 16% to 3bn rand ($199.3mn).
But interest income remains Capitec’s largest source of revenue, increasing 16% to 12.5bn rand.
Fourie expects tough economic conditions to continue as the effects of a severe drought, the weaker rand exchange rate and rising inflation flow through to consumers.
“In the last three months we saw a weakening, and not necessarily from our clients, but from employers - especially small and medium size enterprises - who pay their employees a few days late,” said Fourie. Despite weak economic growth the firm has no immediate plans to expand beyond South Africa’s borders. “We still see strong growth here and to take our focus away from it would be risky,” Fourie said.
Capitec posted diluted headline earnings per share of 2,781 cents for the fiscal year ended February 29, compared with 2,206 cents a year earlier. The lender had flagged earnings could rise by as much as 27%.
ICBC, BoC
Two of China’s Big Four state-owned banks yesterday reported near-flat net profit growth in the fourth quarter of 2015, as margins continued to shrink amid a growing pile of bad debt. The world’s largest lender, Industrial and Commercial Bank of China (ICBC) reported profit that was unchanged from the same period a year prior, while Bank of China (BoC), the country’s fourth-largest lender, said profit rose 2%.
“In 2015, financial risks emerged in multiple fields and threatened to spread under the pressure of downward trends in the economy, declining corporate profits, and tumbling capital markets,” ICBC said in its annual results statement filed at the Hong Kong and Shanghai stock exchanges.
Net interest margins (NIM) - the difference between a bank’s borrowing rate and interest earned on loans - also fell at the two lenders, a sign that falling interest rates are squeezing returns from loans.
ICBC’s NIM fell to 2.47% as at the end of December from 2.53% at the end of June, while that at BoC fell to 2.12% from 2.14% at the end of September.
For ICBC, profit rose 0.04% to 55.4bn yuan ($8.55bn) in the three months through December, in line with the 53.8bn yuan average estimate extrapolated from 14 analysts polled by Thomson Reuters on their expected yearly profit.
For the whole of 2015, profit rose 0.5% to 277.1bn yuan.
At BoC, fourth-quarter profit rose 2% to 39bn yuan, above the 36bn yuan estimate extrapolated from analysts polled by Thomson Reuters on their expected annual profit. For 2015, net profit rose 0.7% to 170.85bn yuan.
The non-performing loan (NPL) ratio at ICBC rose to 1.5% as at end-December, from 1.44% at end-September, while BoC’s was flat.
“In 2016, the domestic and global economy are going through a period of deep adjustment and face a lot of uncertainties. China’s economy is challenged by big downward pressure, putting pressure on asset quality,” BoC President Chen Siqing said after the bank released earnings.
Analysts are predicting a tough year for both banks.
Skinnier net interest margins and higher non-performing loans could mean ICBC’s profit falling 3.3% this year, according to March research note from China Merchants Securities (HK).
At BoC, analysts are divided on whether its global footprint is a help or a hindrance.
“BoC should prove to be more resilient than peers amid the current operating environment thanks to its larger overseas exposure,” China Merchants Securities said.
But given that a large proportion of BoC’s overseas loans originate from currency arbitrage, the business could shrink this year as the market expects further yuan depreciation, said Daiwa Capital Markets in a March note.
BoC’s return on equity fell to 14.53% from 17.28% in 2014 and 18.04% in 2013.
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