China’s ICBC flags trade war risks as profits rise
Chairman says trade tension bringing uncertainty to economy
Industrial and Commercial Bank of China (ICBC), the world’s largest commercial bank, joined its peers in reporting higher first-half profit and a steady bad loan ratio, but flagged trade tensions as a risk to the economy.
ICBC, like other big stateowned lenders, has been seeing a rebound in business with its diverse revenue sources and strong capital buffers giving it an edge over smaller peers as China cracks down on risk in the broader financial sector.
But “trade friction is bringing uncertainty to global and China economy”, ICBC Chairman Yi Huiman said at a news conference yesterday.
For the six months ended June, China’s biggest bank by assets netted a profit of 160.4 billion yuan (Dh86.2 billion; $23.47 billion), compared with 153 billion yuan in the same period a year earlier, the bank said in a filing.
The first-half figure implies a net profit of 81.6 billion yuan for the second quarter, up 5.7 per cent from 77.2 billion yuan a year ago, according to Reuters calculations.
Analysts had expected a 5.2 per cent rise in quarterly net profit, according to four analyst estimates compiled by Reuters.
ICBC’s net interest margin (NIM), the difference between interest paid and earned — a key gauge of profitability, was 2.30 per cent at the end of June, steady versus end-March levels.
Margins are expected to improve for lenders across the board in the second half with Beijing pumping funds into the banking system and rolling out support measures for local businesses to cushion the impact from an escalating US-China trade war.
Fitch Ratings said Beijing’s recent measures to support the economy amount to a loosening of its policy stance.