BoComm H1 profit up 4.61%
State-owned commercial lender sees nonperforming loan ratio drop slightly
Bank of Communications Co Ltd posted 4.61 percent net profit growth year-on-year in the first half of this year, hitting a record high since 2015.
Net profit attributable to shareholders of the bank significantly improved during the first six months and stood at 40.77 billion yuan ($5.92 billion), according to its 2018 interim results announcement issued on Thursday.
Bank of Communications is the first of the five largest State-owned commercial lenders in China to announce its midyear performance.
The bank strengthened efforts to develop consumer finance, with personal credit contributing more than 70 percent of its new loans in the first half, up by 34 percentage points year-on-year.
During the same period, the value of payments through the bank’s credit cards also increased by 44 percent yearon-year to 1.47 trillion yuan.
Its nonperforming loan ratio dropped slightly by 1 basis point from the end of last year to 1.49 percent as of June 30, whereas its NPL balance increased from 68.51 billion yuan to 71.51 billion yuan.
Meanwhile, provision coverage for impaired loans rose 16.25 percentage points from the end of last year to 170.98 percent, significantly improving its anti-risk capability.
As the Bank of Communications’ net profit growth enhanced noticeably, China Securities Finance Co Ltd continued to increase its investment in the bank.
By the end of June, the financial institution specializing in securities held 2.7 billion shares of the bank, or 3.64 percent of the total, increasing by 297 million shares from the beginning of this year.
Academics said the increased stake in the Bank of Communications shows the confidence of big investors in mid and long-term investment in China’s banking sector, especially in large State-owned commercial banks.
Also on Thursday, the China Banking and Insurance Regulatory Commission announced a decision to remove the cap on foreign ownership in Chinese banks and asset management companies. Overseas financial institutions will be treated the same as local companies, the banking and insurance regulator said in a statement.
Ren Deqi, vice-chairman and president of the Bank of Communications, said the bank holds an open attitude toward the decision. It will further strengthen cooperation with its long-term partner HSBC and make some new moves this year, he said.
The two banks have deepened their cooperation in recent years. During the first six months of this year, they jointly offered syndicated loan and offshore bond issuance services worth a total of $898 million. Next, they will explore a higher level of partnership in terms of the Belt and Road Initiative, renminbi internationalization, and the GuangdongHong Kong-Macao Greater Bay Area, according to executives at the Bank of Communications.