China‘s top four state-controlled banks warned bad loans could rise and interest margins would shrink industry-wide, as three of them posted their weakest quarterly profit growth in more than two years.
Top lender Industrial and Commercial Bank of China (ICBC) reported flat net profit of 58.05 billion yuan ($8.63 billion) for the fourth quarter, the first time it has seen no growth in a quarter since the July-September 2016 quarter.
And China Construction Bank Corp, the country‘s second-largest lender, posted on Wednesday a 1 percent drop in net profit, its first quarterly decline since the October-December 2015 quarter.
op lender Industrial and Commercial Bank of China (ICBC) reported flat net profit of 58.05 billion yuan ($8.63 billion) for the fourth quarter, the first time it has seen no growth in a quarter since the July-September 2016 quarter.
And China Construction Bank Corp, the country‘s second-largest lender, posted on Wednesday a 1 percent drop in net profit, its first quarterly decline since the October-December 2015 quarter.
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MENT Agricultural Bank of China Ltd (AgBank), the third-largest lender, also posted a drop of 5.4 percent on Friday in fourth-quarter net profit, its first quarterly decline since 2015.
While non-performing loan (NPL) ratios edged down by 0.01 percentage points at all the so-called Big Four state banks, which also include Bank of China Ltd (BoC), the lenders sharply increased provisions for future bad debt to cushion themselves against a slowdown in the world‘s second-largest economy and festering China-U.S trade tension.
"We deeply feel it‘s quite difficult to maintain the low bad loan level. There are external factors, our own reasons, problems with multi layers of local governments and other pressure," said Xu Yiming, CCB‘s chief financial officer, in Beijing on Thursday.
"Do not think we are doing so well with 1.46 percent NPL ratio. It is very fragile. Once the environment changes, it can increase."
China‘s economy grew last year at its slowest pace since 1990, partially due to the trade war and Beijing‘s crackdown on financial risks, which raised corporate borrowing costs.
To spur growth, Beijing is pushing banks to significantly boost lending to small businesses by at least 30 percent this year - a move that some analysts say could worsen banks‘ future asset quality as those borrowers are riskier and more vulnerable to slowdowns.
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NTIC BC set aside more than 160 billion yuan 。
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