Commercial Banks Post 9.4% Profit Drop in First Half as Pandemic Bites
What’s New: China’s commercial banks reported a 9.4% decline in first half net profits to 1 trillion yuan ($143 billion), reflecting the impact of the Covid-19 pandemic, data from the China Banking and Insurance Regulatory Commission (CBIRC) showed Monday.
The CBIRC didn’t provide a breakdown of the quarterly profit figure, but a Caixin calculation based on previously released figures showed that the second-quarter profit of commercial banks dropped 28.4% from a year ago. The bad-loan ratio increased by 0.03 of a percentage point from the first quarter to 1.94% at the end of the second quarter while provision coverage for risky assets declined 0.8 of a percentage point to 182.4%.
Total assets of Chinese banks rose 9.7% in the second quarter to 309 trillion yuan, CBIRC data showed.
The background: The latest figures reflect the unfolding impact of the pandemic on China’s banking sector. Regulators earlier warned of rising risks and business pressures after the upbeat first quarter.
While the overall bad loan ratio remains stable, experts said big banks are facing greater challenges as the main supporters of small and micro businesses, which have been hit hard by the pandemic. The persisting outbreak abroad is posing more uncertainties for China’s export businesses, they said.
Quick Takes are condensed versions of China-related stories for fast news you can use. To read the full story in Chinese, click here.
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