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Bank of Communications

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Bank Profits Under Pressure as Non-Performing Loans Remain High: The Conflict Between Dividends and Capital Accumulation Intensifies

In 2023, China's banking sector faced a "cold spring" with many banks reporting a decline in revenue and a slowdown in net profit growth due to weak expectations, insufficient demand, and narrowing interest margins. Despite rapid asset growth, the quality of assets remained stable with high non-performing loan (NPL) ratios in real estate loans and rising NPL generation rates in credit card and consumer loans.
The six major Chinese banks reported an average revenue growth rate of 0.58%, a decrease from the previous year, while the ten national joint-stock banks saw an average revenue growth rate of -3.29%. At least five listed small and medium-sized banks achieved net profit growth rates exceeding 15%, but others experienced significant profit declines.
Banks are focusing on maintaining stable interest margins and exploring ways to increase non-interest income amid pressures on net interest income and fees/commission income. They are also balancing dividend payouts with capital replenishment needs in light of regulatory changes and economic uncertainties, aiming for sustainable development without compromising their ability to support economic growth and manage risks effectively.

Apr.6 2024 13:24 PM

Goldman Slashes Stock Ratings of Big Chinese Banks

The $4.69 trillion of local government debt held by 12 state-owned and private banks threatens earnings and dividends, the Wall Street bank finds

Jul.7 2023 04:34 AM

Corruption Probe of China Life’s Chairman Was No Surprise, Sources Say

Wang Bin is under investigation on suspicion of serious violations of law and party discipline

Jan.10 2022 20:08 PM

In Depth: Behind HNA’s Fall, a Web of Nepotism Spreading from New York to Hainan

Brothers of now-arrested Chairman Chen Feng and late co-founder Wang Jian wove a web of businesses that conducted secret dealings with bankrupt conglomerate

Sep.25 2021 08:01 AM

Blog: China Has Lost a ‘Pragmatic’ Voice With the Death of Former Finance Minister Jin Renqing

‘Honest and straightforward,’ Jin welcomed foreign knowhow and kept a watchful eye on global capital markets, writes Primus Pacific Partners Chairman Huan Guocang

Aug.30 2021 16:36 PM