China’s Big Six banks meet first-quarter profit forecasts, but Covid-led slowdown poses higher bad loan risks
- Leading state-owned Chinese banks report first-quarter profit growth in line with expectations
- Postal Savings Bank of China beat estimates, posting 18 per cent profit growth
The Big Six – Agricultural Bank of China, Bank of Communications, Bank of China, China Construction Bank, Industrial and Commercial Bank of China and Postal Savings Bank of China – reported stable non-performing loan (NPL) ratios in the first-quarter compared with the end of last year, thereby lightening their impairment charges.
But going into the second half, there is likely to be an overall increase in corporate and retail NPLs due to the slowing economy, said Chen Shujin, an analyst at Jefferies.
“We expect more negative impact to [NPL ratios] for personal business loans due to the recent lockdowns in major cities,” said Chen.
The banking sector escaped the impact of the latest Omicron outbreak in Shanghai, which brought China’s financial hub to a halt after a lockdown was imposed on April 1. China is now grappling with one the most severe bouts of disruption to economic activity since the Covid-19 pandemic started in late 2019, as the nation’s zero-Covid policy has forced factories and businesses to suspend operations intermittently over the last two months.