Week in review
- U.S. consumer confidence drops 4.7pts to 98.3
- South Korea cuts policy rate by 25bps
- Japan Tokyo CPI up 2.9% y/y, core up 2.2% y/y in February
Week ahead
- U.S. Feb non-farm payrolls
- ECB interest rate decision
- China NPC
Thought of the week
With China’s annual NPC meeting scheduled for later this week, discussions on the government’s policy targets and potential stimulus measures are gaining momentum. One topic of interest is bank recapitalization, with rumors of fresh Tier-1 capital being injected into select Chinese state-owned banks. Although a narrowing net interest margin and increasing non-performing loans remain a headwind for the sector, these SOE banks still maintain more than sufficient capital levels, with CET1 ratios ranging between 140 to 510 basis points above their respective minimum requirements. As such, this could be a preemptive move to shield against bad loans, encourage credit extension, and maintain dividend payouts in the coming years. With dividends from these SOE banks, and the broader sector, yielding notably higher than Chinese government bonds, this sector continues to present an attractive case, especially for onshore investors seeking an income-oriented strategy.
China banks’ net interest margin and total non-performing loan
Percent, CNY trillion
Source: Bloomberg, China Banking Regulatory Commission, JP Morgan Economic Research, JP Morgan Asset Management. Data reflect most recently available as of 28/02/25.
Market data
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