China banks seen to post ‘strong’ profit growth in third quarter

More central government moves to address local government debt issue, decline in inflation and resolution of the European debt crisis may boost growth.

Chinese banks may report “strong” profit growth in the third quarter, according to Barclays Plc.

Hong Kong-listed Chinese lenders may post 32 percent profit growth on average in the third quarter, led by China Minsheng Banking Corp., Agricultural Bank of China Ltd. and China Citic Bank Corp, according to a report in Business Week.

“We believe the current share prices may reflect too bearish a scenario for asset quality deterioration,” said Barclays analysts May Yan and Shujin Chen in a report Monday. “Negative news flow may have peaked.”

Positive catalysts in the next several months include more central government measures to address local government debt issue, a gradual decline in inflation and a resolution of the European debt crisis, the report said.

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