Days of banks’ fat profits are over
Print Edition
The days of China’s banks raking in easy fat profits have gone, for now, as the slowing economy and market-based financial reform squeeze profits and extend bad loans, semi-annual reports have shown.
By yesterday, seven commercial lenders had published their first-half reports, and all of them posted slower profit growth and higher non-performing loan ratios, although the performance was better than expected.
Profit growth of Ping An Bank slowed the most at 11.3 percent from last year’s 45.2 percent. China Construction Bank saw the smallest growth rate gap of 2.02 percentage points.
The Industrial Bank saw the non-performing loan ratio climb by the most 0.14 percentage point to 0.57 percent. Those of the Bank of Communications and CCB stood at the highest of 0.99 percent.
The first-half performance of listed banks was also in line with the data calculated by the China Banking Regulatory Commission, the regulator.
The industry’s combined net profit grew 13.83 percent to 753 billion yuan (US$121.5 billion), compared with 23.3 percent in the same period a year ago. NPLs totaled 539.5 billion yuan, up 46.7 billion yuan from the start of this year.
Slowing profits and rising bad loans are normal phenomena amid weakening economic growth and market-based financial reform, analysts said.
China’s economy has eased to 7.5 percent growth in the second quarter from the first quarter’s 7.7 percent expansion.
To revitalize the economy through pumping more market impetus, the central bank scrapped the floor on lending rates in July.
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