China’s largest five banks report strongest first-half profit since height of property crash
They reported profit growth of between 3% and 5% in the first half
Add BT as a preferred source
[SHANGHAI] China’s five largest banks have reported profit growth of between 3 per cent and 5 per cent in the first half, as non-performing loan ratios held steady or fell and the commercial banking sector delivered its strongest performance in several years.
As a whole, the country’s commercial banking sector for the first half posted its first quarterly improvement in net interest margins – one of the most important indicators of a bank’s profitability since 2022, official figures have shown this month.
Industrial and Commercial Bank of China , the world’s largest lender by assets, reported on Friday a 3.3 per cent rise in first-half net profit, while Bank of China logged the largest percentage growth among the big five at 5.1 per cent over the same period.
Agricultural Bank of China , China Construction Bank Corp and Bank of Communications reported 4.9 per cent, 4.6 per cent and 4 per cent net profit in the first-half, respectively. For four of the biggest banks, first-half net profit growth was the highest since 2022 and for the Bank of Communications it was the highest since 2023.
Official data for the wider commercial sector released earlier this month showed the average improvement in net interest margins had risen one basis point to 1.41 per cent in the second quarter from three months earlier, the first quarterly rise since 2022 when the impact of property-linked loan defaults on the Chinese economy was at its height.
The recovery is uneven, however, as smaller banks remain exposed while the biggest lenders have been sheltered by their risk aversion. As the Chinese economy, with growth of around 4 per cent stays sluggish, analysts did not expect a sustained recovery.
“We do not expect margins to improve much in the near term, given the relatively low-rate environment and weak domestic consumer demand,” said Elaine Xu, a director at Fitch Ratings.
Nicholas Zhu, a banking analyst at Moody’s, also said he expected weak consumption to “continue to constrain fee growth prospects related to the card business”.
He said asset risks would rise “as more creditworthy consumers refrain from increasing leverage but less creditworthy ones remain as active borrowers”. REUTERS
Decoding Asia newsletter: your guide to navigating Asia in a new global order. Sign up here to get Decoding Asia newsletter. Delivered to your inbox. Free.
Share with us your feedback on BT's products and services
