Singapore's Temasek trims stake in ICBC as China's slumping property market dents state lenders' profits

Temasek Holdings, Singapore's sovereign wealth fund, cut its stake in the Industrial and Commercial Bank of China (ICBC) twice in one day last week, reducing its share of the lender to less than 5 per cent.

The state investor first trimmed its allocation in China's biggest bank by selling 825 million H-shares at an average price of HK$4.7 each on May 27, taking its stake from 6.01 per cent to 5.06 per cent, AA Stocks reported on Tuesday.

This was followed by a further cut of HK$408 million on the same day, lowering Temasek's stake in ICBC to to 4.96 per cent, according to the financial news portal.

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Temasek declined to comment when contacted by the Post.

The move came after the sovereign wealth fund posted a rare net loss of US$7.3 billion for the financial year of 2023 amid geopolitical uncertainties and elevated interest rates. That stood in stark contrast with a net profit of US$11 billion in 2022, and marked the first time that Temasek's profit has turned negative since 2016.

The state investor also reported a 5.2 per cent drop in its net portfolio value to US$283.4 billion in the financial year ended March 2023 - the first such decline since 2020.

Its troubles have deepened lately. Mapletree Investments, a real estate firm owned by the sovereign wealth fund, in May reported its first loss in two decades as a result of a slide in the global commercial property market.

The property investor, which has significant exposure to North America and China's commercial targets, posted a loss of US$428 million for the financial year ending March, compared to a US$890.5 million profit in the previous year.

The profitability of China's state lenders has come under pressure as a result of slowing economic growth at home coupled with a prolonged downturn in the property sector, which used to account for around a quarter of the nation's gross domestic product.

ICBC reported its first decline in quarterly profit in over a year in April. The Beijing-headquartered bank saw its net income decline 2.78 per cent to 87.7 billion yuan (US$12.1 billion) in the first three months of 2024, while its net interest margin narrowed to 1.48 per cent from 1.61 per cent at the end of last year.

China Construction Bank (CCB), another major state-owned lender that also has Temasek's backing, saw its first-quarter profit decline 2.2 per cent year on year to 86.8 billion yuan, while its net interest margin slipped to 1.57 per cent from 1.7 per cent in 2023.

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