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Bloomberg
China’s biggest banks posted stable earnings growth in the second quarter, boosted by tighter liquidity even as the broader sector struggled with government policies.
Profits at four of the five largest lenders rose at least 5 percent in the three months through June, as President Xi Jinping’s crackdown on riskier financiers pushed business to large state-connected banks. The results were broadly in line with expectations, even as a record surge in bad debt, prompted by the deleveraging effort, swamped smaller lenders.
While Chinese policy makers are focusing on cutting risky debt, they are also seeking to protect economic growth as the trade war with the US intensifies.
Authorities have taken several steps to free up credit, including ordering the nation’s lenders to boost support for infrastructure projects and small businesses. Bad-debt ratios at the big banks are improving as they reduce exposure to industries suffering from overcapacity and boost recovery efforts.
“We think broad-based results are improving with strong pre-provision operating profit growth on the back of faster loan origination and net interest margin expansion,†Goldman Sachs Group Inc. analysts including Tian Lu wrote in a note.
Shares of Agricultural Bank of China Ltd. rose as much as 1.6 percent in Hong Kong on Wednesday, while Bank of China Ltd. and China Construction Bank Corp. stock dropped as much as 1.7 percent. The three banks reported earnings Tuesday. Bank of Communications Co. has seen its shares gain 3.6 percent since reporting on Thursday.