New | China's biggest banks see slower profit growth amid 'new normal'
Second-quarter income growth at three big commercial lenders drops below same period last year amid higher provisions for bad loans
China's "new normal" is anything but normal for its four supersized commercial banks, three of which posted a drop in net profit growth for the second quarter of the year.
Earnings reports for the first half of the year have led industry watchers to question if growth in profits for this year will stall or even fall, a first for listed national commercial banks.
Net profit growth at Industrial and Commercial Bank of China, China Construction Bank and Agricultural Bank of China between April and June came in below the same period last year, according to data compiled by analysts. Bank of China escaped the quarter with about 1 per cent profit growth.
The lenders are still some of the most profitable in the world, with ICBC bringing in 149 billion yuan in the first six months of this year. But in the span of just a year, profit growth has tumbled from double digits to zero.
"This is the first time the banks have faced this situation," Chen Xingyu, an analyst at Phillip Securities, said of the four biggest lenders' performances since they listed in Shanghai between 2006 and 2010. "This is a critical period for them."
New normal is a byword for slower economic growth but has been trumpeted by the central government as the transition of the economy to higher-quality growth and a reduction in inefficiencies at manufacturers and state-owned firms.
The four national commercial banks have all parroted the line and have pitched it as a period to make breakthroughs in development.
