Tighter spreads hurt bank profit

The record 4.58-trillion-yuan lending surge seen in the first quarter of this year has failed to lift bank earnings, which have been depressed largely due to thinning profit margin.

Bank analysts said the narrowing spread between deposit and lending rates, which dictate bank profitability, will continue well into the second quarter and probably even the third.

The 14 publicly listed banks extended 2.64 trillion yuan in new loans during the first three months, accounting for 57.7 percent of the 4.58-trillion yuan in fresh loans issued by Chinese banks. But the aggregate profit of the 14 publicly listed Chinese banks dropped 8.88 percent during the first quarter, to 108.75 billion yuan, according to market researcher Wind Info.