Bank of Communications’ first-half earnings survive China’s Covid-19 measures unscathed, but outlook tainted by credit card business

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Bocom’s first-half net profit rises 4.8 per cent year on year in line with analysts’ expectations

Postal Savings Bank of China’s net profit rises 14.9 per cent year on year to 47.1 billion yuan

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A Bank of Communications branch in Hong Kong. The bank says it has granted payment extensions worth US$393.4 million to some of its credit card customers. Photo: Reuters

Georgina Lee

Published: 8:00am, 27 Aug 2022Updated: 10:24am, 28 Aug 2022

Two Chinese state-owned banks said this week that their first-half earnings were largely unhurt by the country’s Covid-19 lockdown measures, but more challenges are in store, with the Bank of Communications (Bocom) warning about a potential rise in sour debt from credit card customers in the second half.

Due to the economic impact of Covid-19 restrictions on some of its retail borrowers, Shanghai-based Bocom has granted payment extensions worth 2.7 billion yuan (US$393.4 million) to some of its credit card customers, it said at its half-year results briefing on Friday.

“While there is some recovery of growth, some regions are still [exposed] to the impact of Covid-19 [restrictions],” said Lin Hua, the bank’s chief risk officer. “For those customers whom we have granted credit card repayment extensions, we cannot rule out that some of these loans would deteriorate.”

The bank’s non-performing loan (NPL) ratio for its credit card business was at 2.66 per cent, up 46 basis points compared to the beginning of 2022, he added.

02:13

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Shanghai, China’s financial hub, went into a two-month lockdown in the second quarter to contain the coronavirus. Moreover, the world’s second-largest economy is widely expected to miss an annual gross domestic product growth target of around 5.5 per cent after reporting only 2.5 per cent growth in the first half of this year.

Bocom, however, remains confident that it can manage its overall NPL levels due to various economic support measures introduced by the government.

Bank of Communications’ first-half earnings survive China’s Covid-19 measures unscathed, but outlook tainted by credit card business

Bocom’s first-half net profit rises 4.8 per cent year on year in line with analysts’ expectations Postal Savings Bank of China’s net profit rises 14.9 per cent year on year to 47.1 billion yuan

Bocom’s first-half net profit rises 4.8 per cent year on year in line with analysts’ expectations

Postal Savings Bank of China’s net profit rises 14.9 per cent year on year to 47.1 billion yuan