Three of China’s Big Four banks post higher profits; bad loans steady in H1

Three of China’s biggest four Stateowned lenders reported higher profits for the first half of the year, as bad loan ratios held steady.

China Construction Bank Corp (CCB), Agricultural Bank of China (AgBank) and Bank of China (BoC) also posted steady or wider net interest margins.

The stronger earnings came as China is pumping funds into the banking system and rolling out support measures for local businesses to cushion the impact from the unstable external trade environment.

Since early July this year, China and the US have imposed tariffs on a combined $100 billion worth of each country’s goods.

Trade friction started by “some country” is threatening global economic stability, AgBank President Zhao Huan told a news conference on Wednesday, a day after the lender reported higher earnings for the first half of the year.

Net profit for AgBank, the first of the so-called Big Four State lenders to report interim results, rose 7 percent year-on-year to 115.8 billion yuan ($16.85 billion).

BoC posted a 5 percent rise in profit to 109.1 billion yuan, while CCB had a 6 percent rise to 147 billion yuan.

Results for AgBank and BoC were underpinned by higher net interest margins, the difference between interest paid and earned, which is a key gauge of banks’ profitability.

The three lenders also posted steady non-performing loan (NPL) ratios, in stark contrast with the broader banking sector, as their diverse revenue sources and strong capital buffers gave them an edge over smaller peers.

AgBank’s NPL ratio fell to 1.62 percent at the end of June from 1.68 percent at the end of March, while the ratio was unchanged for BoC from the end of March at 1.43 percent.

CCB’s was 1.48 at the end of June, versus 1.49 percent at the end of March.

At the end of June, the NPL ratio for the wider banking sector was 1.86 percent – the highest level since 2009.