Profits rise at mainland China banks but headwinds hit growth

The mainland's three largest banks yesterday posted first-quarter growth in net profit ranging from just over 8 per cent to almost 16 per cent year on year.

Those increases were smaller than last year's as the lenders felt the effects of the country's economic slowdown.

Industrial and Commercial Bank of China (ICBC), the world's biggest bank by assets, said its net earnings rose 12.08 per cent year on year to 68.74 billion yuan (HK$86.56 billion) on robust growth in net fee and commission income.

China Construction Bank (CCB), the mainland's second-biggest lender by assets, posted a 15.66 per cent increase in net profit to 59.58 billion yuan.

Agricultural Bank of China, the third-largest, said its net earnings rose 8.19 per cent to 47.01 billion yuan.

Earnings growth at mainland banks is starting to slow from the skyrocketing pace of the past few years as the economy cools. Ongoing interest rate liberalisation will spell an end to the days when banks could simply sit on lucrative interest rate spreads.

"The economic recovery is still shaky, and monetary policy is unlikely to be further loosened, which means banks will have a stable year, with profits up an average 8 per cent," said Dai Zhifeng, an analyst at Shanghai-based Haitong Securities.