Chinese megabanks hit ‘modest' profit growth in Q1

New loans reached a record amount of $862.89b.

Reuters reported that China’s big five state-owned banks recorded ‘modest’ profit growth in Q1 as policymakers pushed lenders to facilitate more loans amidst China’s economic slowdown.
Chinese banks extended a record amount of $862.89b (RMB5.81t) worth of new credit in Q1.

Also read: Chinese banks' small business loans up 17% in Q1 as stimulus kicks in

ICBC, which is considered as the world’s biggest bank in terms of assets, saw its profit rise 4.1% to $12.7b (RMB82.01b) whilst Bank of Communications (BoCom) booked its fastest quarterly growth in five years with a 4.9% rise in profits to $3.13b (RMB21.07b).

Meanwhile, non-performing loan (NPL) ratios fell at ICBC, BoCom and Agricultural Bank of China, and held steady at China Construction Bank (CCB) and Bank of China (BoC). Net interest margin (NIM), a key gauge of profitability, improved slightly at ICBC and BoCom but narrowed by 0.08 ppt at BoC and 0.02 pptat CCB in Q1.

Also read: Chinese banks' assets up 7.7% to $33.9t in March

“The formation of new NPLs can’t be taken lightly should the macroeconomic situation become less stable, so there’s a lingering concern for the asset quality,” Nicholas Zhu, a Beijing-based banking analyst of Moody’s Investors Service, said.

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