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Bank of China, ICBC see profit growth drop sharply as slowing economy, property crisis take a toll
- Both lenders comfortably missed analysts’ estimates for net profit amid an escalating property crisis that has dampened creditor confidence
- They each reported a small drop in their non-performing loans ratio in the first half of the year
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Yuke Xiein Beijing
Two of China’s biggest banks, Industrial and Commercial Bank of China (ICBC) and Bank of China (BOC), posted sharply lower profit growth in their interim financial results as they struggled with a slowing economy and persistent crises in the property sector.
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ICBC, the world’s largest bank with total assets of 43.67 trillion yuan (US$5.99 trillion), reported a 1.2 per cent year-on-year gain in net profit to 173.74 billion yuan in the six months ending June 30. The lender missed expectations of a 6.8 per cent increase to 183.2 billion yuan by analysts polled by Bloomberg.
Meanwhile, Bank of China (BOC), the world’s fourth-largest bank with assets of 31.09 trillion yuan, posted a net profit of 120.1 billion yuan, an increase of 0.78 per cent compared with the same period of the prior year, missing analyst estimates of a 2.9 per cent growth to 123.5 billion yuan as polled by Bloomberg.
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ICBC’s non-performing loan (NPL) ratio, a gauge of potential bank losses, fell to 1.36 per cent from 1.38 per cent at the start of this year. Meanwhile, BOC’s NPL dropped to 1.28 per cent at end-June from 1.32 per cent in December.
The results came amid an escalating property crisis that has dampened creditor confidence and threatens the health of financial institutions.
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