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China banks report higher first-half profits, steady bad loan ratio

[BEIJING] China's commercial banks reported higher first-half profits than a year earlier, and the overall level of non-performing loans (NPLs) in June did not increase from March, the country's banking regulator said on Monday.

Total profits for commercial lenders reached 970.3 billion yuan (S$198.1 billion) for the six months ended in June, up 7.92 per cent from the first half of 2016, China Banking Regulatory Commission (CBRC) data showed.

While profits increased, profitability - measured by return on assets and return on equity - slightly decreased from a year earlier, the CBRC said.

The NPL ratio for commercial lenders was at 1.74 per cent at end-June, unchanged from the end of the first quarter, according to the regulator.

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Commercial bank NPLs totaled 1.64 trillion yuan, up from 1.58 trillion yuan at end-March.

According to the CBRC, the percentage of "special mention loans" - ones where borrowers are experiencing difficulties - eased slightly to 3.64 per cent by end-June from 3.77 per cent at end-March.

China's banking regulator has pressed commercial lenders this year to clean up their operations and reduce risk, as a surge in total lending causes the country to pay increasing attention to the health of its financial system.

The People's Bank of China, in its second-quarter monetary policy report published on Friday, said the central bank will continue to improve its quarterly macro-prudential assessment (MPA) of the operations of financial institutions.

At the National Financial Work Conference, a once-in-five-years government gathering held last month, President Xi Jinping said that financial security is a vital part of national security.

The CBRC on Monday also said that the weighted average core tier 1 capital adequacy ratio for commercial banks was 10.64 per cent at the end of June, down from 10.79 a quarter earlier.