Bank of China Limited reported an increase of 2.6% for the full-year profit as the drop in impairment helped offset the pressure on the decline.
It said in a document Wednesday that net income rose to $237.8 billion in 2024. Starting from 1.59% in the same period last year, net interest margin narrowed from 1.59% to 1.4%, while non-performing loan ratios fell from 1.27% to 1.25%.
Bank of China has been competing for lower loan yields as authorities since the second half of last year, cutting mortgage interest rates and key policy rates to inject momentum into the world’s second largest economy. At the end of last year, profit margins in the $60 trillion sector, which is a key profitability, fell to a record 1.52%.
Bloomberg Intelligence Agency expects China’s largest banks to further narrow margins by 13 to 16 basis points this year, worse than the consensus drop by 9 to 11 basis points, analyst Francis Chan wrote in a note earlier this month.
Peer bank communications firms rose 0.9% last week as lower credit barriers offset margin contraction. China’s three largest state-owned banks, led by China Industrial and Commercial Bank Co., Ltd., will release their full-year results on Friday.
BOC said the average interest rate on its interest bearing assets fell by 24 basis points last year, mainly due to cuts in major loan and mortgage rates in China.
Chan said the impact of the four major lenders’ pre-tax profit loss this year could result in a 4% to 8% profit mistake.
The bank said it actively reduces risks in key areas including real estate, reducing its non-performing loan ratio to 5.51% last year to 4.94%.
Its stock has grown 16.4% in Hong Kong trading this year.
Beijing is trying to strengthen its capital strength among its first six lenders, pledging to issue the initial 500 billion yuan of special sovereign bonds to improve its core level of capital. While this will allow banks to obtain more loans, the injection will also dilute their income.
This article was generated from the Automation News Agency feed without the text being modified.
