China Construction Bank third quarter profit rises 1.5pc
The state-controlled lender reports quarterly profit of 60.7 billion yuan, bolstered by growth in insurance, wealth management and other services
China Construction Bank, the country’s second-largest lender, said its net profit rose 1.5 per cent in the third quarter, though at the cost of dipping into its buffers set aside to cover bad loans.
In the three months to September 30, CCB reported net profit of 60.7 billion yuan up from 59.8 billion yuan for the same period in 2015.
CCB also reported that it had kept a grip on its bad loans as a proportion of its total lending, declaring that its non performing loan ratio fell by 0.07 percentage point in the third quarter to stand at 1.56 per cent.
The average NPL ratio for China’s banking industry in the first half of this year was 1.78 per cent, based on regulatory data.
Nomura analysts said in a report earlier this month that they expect the pace of growth in non-performing loans at Chinese banks to slow, but that the length of time required to digest or dispose of impaired loans to be longer than had been expected.
However, to achieve its increase in net profit and improved NPL ratio, China Construction Bank allowed its bad loan buffer to fall below the regulatory minimum. The bank’s ratio of allowances to non-performing loans was 148.78 per cent, below the required 150 per cent.
Bank of China’s bad loan buffers dipped below 150 per cent in the first quarter of this year, as did ICBC’s in the first and second quarters.