Big China banks report flat H1 net profits
Two of China's biggest lenders, including the main foreign exchange dealer Bank of China, reported flat net profits for the first half of 2015, due to the weak domestic economy and growing bad loans. Bank of China (BOC) net profit rose a mere 1.14 percent year-on-year to 90.75 billion yuan ($14.18 billion), the bank said Friday in a statement to the Hong Kong stock exchange, where it is listed. The bank said the global economy experienced sluggish growth in the first half and it was also seeking to adjust to China's "new normal" -- the authorities' preferred term for slower but hopefully more sustainable expansion. China's economy grew 7.0 percent in each of the first two quarters, slowing from a 7.4 percent expansion last year, which was its weakest since 1990. BOC’s non-performing loans (NPLs) reached 125.05 billion yuan in the first half, for an NPL ratio of 1.41 percent by the end of June, higher than 1.18 percent at the end of last year, the statement showed. The bank's stock price fell 3.53 percent in Hong Kong and was unchanged in Shanghai on Friday before the results were announced. Another of China's "Big Four" state-owned banks, Agricultural Bank of China (ABC), said its net profit for the first half rose only 0.3 percent on-year to 104.32 billion yuan, a statement to the Hong Kong stock exchange showed late Thursday. The bank, which has traditionally served rural areas of China, said downward pressure on the world and domestic economies, as well as increased bad loans, weighed on its performance. "Currently, global economic development remains unstable and uncertain. China's economy is still confronted with great downward pressure," bank Chairman Liu Shiyu said in the statement. "In the face of various challenges such as increasing non-performing loans and slowing profit growth, the bank has a difficult task of preventing and controlling business risks," Liu said. Its bad loans rose to 159.54 billion yuan, implying an NPL ratio of 1.83 percent by the end of June, up from 1.54 percent at the end of last year, according to the statement. The bank's stock fell 2.84 percent in Hong Kong and rose 1.01 percent in Shanghai on Friday after the announcement. The Industrial and Commercial Bank of China, the country's biggest bank, on Thursday reported a less than one percent year-on-year rise in net profit to 149.02 billion yuan for the first half, also affected by the slowing economy.
