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State Banks Post Strongest Profits in Years
30 Oct
Summary
- Five major Chinese state banks reported 6-11% profit growth.
- Net interest margins stabilized due to deposit repricing and easing.
- Asset quality remained stable, but retail and tech loans pose risks.
China's five largest state-owned banks have reported their most significant quarterly profit increases since 2021 or 2022, with growth rates ranging from 6% to 11%. These positive results were bolstered by stabilising net interest margins, a trend attributed to the repricing of higher-cost deposits and recent monetary easing measures. The banks also maintained broadly stable asset quality, with non-performing loan ratios remaining flat or slightly declining for most.
Despite the positive performance, a slowing economy and weak credit demand continue to present challenges. While policymakers have increased targeted monetary support, analysts suggest these measures are unlikely to drive a substantial recovery in lending. Concerns are also being raised about emerging asset quality risks in loans to the technology and innovation sectors, as well as potential pressures on retail asset quality.
