(Added context in paragraphs 12-13 and 15, HSBC added paragraphs in paragraphs 16-17, Moody’s quote in paragraph 14)
China’s top five banks record profits
Profits fell in the first quarter three lenders
The non-performing loan ratio is mostly flat
By Engen Tham and Selena Li
Shanghai/Hong Kong, April 29 (Reuters) – China’s top five lenders reported on Tuesday that profit margins were narrower in the first quarter, with profits falling as banking sectors were hit by a lasting economic slowdown, while the outlook for tariffs increased further.
Developer defaults are also weighing the revenues of large Chinese state-owned banks as the country’s economically vital real estate sector continues to drag on amid the debt crisis.
“In the first quarter of 2025, the global economy lacked strong growth momentum,” China Construction Bank said in its first quarter results, with net profit falling by 4% a year ago.
“The prospect of global trade growth has encountered many challenges, including rising tariffs.”
The United States and China are trapped in a tariff war against Tat, which has increased business volatility and reduced trade between the world’s two largest economies.
China Industrial and Commercial Bank (ICBC) is the world’s largest lender, with first-quarter profits down 4% and 2.9% from a year ago, respectively.
Profits on all three lenders fell.
“Growth in micro-enterprise and small-enterprise (MSE) loans are slowing, but they are still fast. We expect risks to gradually emerge as the economic growth faced by the counter-trend of the tariff shock.”
Although China Communications Bank (BOCOM) and Agricultural Bank of China (AGBANK) saw net profits drop by 1.5% and 2.2%, respectively, the profit margins of the two lenders also fell.
For all banks, the non-performance loan ratio remains stable or slightly declined. But over the next few months, NPLS may increase, analysts say.
“Asset risks will be high in the risks of China’s economic transition financing to the high-end manufacturing, technology and clean energy sectors,” Zhu said.
Bank of China is expected to be further squeezed by this year’s key interest rate cuts.
Beijing has kept the country’s loan interest rates stable for the sixth straight month, but in the coming months, the market may stimulate more stimulus to allow even keel growth, an intensified intermediate trade war.
“While lower interest rates may reduce borrowers’ debt service costs, they will also compress banks’ net interest margins and further reduce profit margins,” Zhu said. In March, four of China’s largest state-owned banks said they planned to raise private private status from investors, including the Ministry of Finance, after Beijing pledged to help them support economic support.
Asia-centric HSBC warned on Tuesday that lending demand and credit quality could suffer wider impacts from the global trade war by U.S. President Donald Trump, indicating toughness for trade-centric banks.
The bank’s CEO said, “The number of the U.S.-China corridor has dropped sharply in industries that have not yet given up or lowered tariffs.” He did not elaborate on it.
($1 = 7.2682 Chinese RMB rminbi) (Reported by Engen Tham, Selena Li and Ziyi Tang; Edited by Kirsten Donovan and Jan Harvey)
