China's listed banks maintained steady growth in the first three quarters, supported by stabilizing net interest margins, expanding asset bases and improving noninterest income.
The 42 banks listed on China's A-share market reported combined operating revenue of 4.66 trillion yuan ($700.7 billion) in the first nine months, up 7.81 percent year-on-year. Net profit attributable to equity holders of the parent company reached 1.75 trillion yuan, representing an increase of 3.78 percent, said market tracker Wind Info.
During the period, China's six largest State-owned commercial banks measured by assets — and city commercial lenders — delivered relatively strong performances.
The "Big Six" generated combined operating revenue of 2.98 trillion yuan, up 9.44 percent year-on-year, while their aggregate net profit attributable to equity holders of the parent company rose 6.14 percent to 1.14 trillion yuan.
City commercial banks also demonstrated considerable resilience. Bank of Ningbo, Bank of Chongqing and Bank of Qingdao all recorded double-digit growth in terms of both operating revenue and net profit.
Net interest income — the difference between interest earned on assets and interest paid on liabilities — remains a key pillar of a bank's operating revenue. In the first three quarters, 40 of the 42 A-share listed lenders reported year-on-year growth in net interest income as the banking sector's net interest margin continued to stabilize.
Bank of Communications reported a 4-basis-point year-on-year increase in its NIM to 1.24 percent. Industrial and Commercial Bank of China and Bank of China each recorded a 1-basis-point improvement.
Du Chunye, vice-president and secretary to the board of directors at Postal Savings Bank of China, said at the lender's third-quarter earnings briefing on Friday that the sector's net interest margin has stabilized and begun to rebound.
The improvement was primarily attributable to lower funding costs. At the same time, the concentrated maturity and repricing of existing time deposits also emerged as an important short-term driver of the recovery, Du said.
The third-quarter financial reports of listed banks also highlight a growing divergence in net fee and commission income. Some large State-owned commercial banks and leading joint-stock commercial lenders have leveraged their advantages in customer bases, product offerings and distribution channels to expand wealth management product distribution, driving steady growth in fee and commission income. By contrast, some city commercial banks and rural commercial lenders have come under pressure in this regard.
Fitch Ratings said Chinese State-owned banks have demonstrated resilient earnings and asset-quality stability despite economic volatility.
On Oct 27, Fitch affirmed the Long-Term Foreign-Currency Issuer Default Ratings of China's six largest State-owned commercial banks at "A", with a stable outlook, while upgrading their Viability Ratings.
Viability Ratings measure the intrinsic creditworthiness of a bank or nonbank financial institution, and reflect Fitch's opinion on the likelihood that the entity will fail.
Fitch said regulatory progress, including the cleanup of wealth management products and entrusted investments — together with the continued disposal of nonperforming assets — had improved transparency in shadow banking activities and reduced contagion risks.
Wealth management products have become increasingly focused on end investors, while the transition toward net asset value-based product structures and the elimination of interbank cross-holdings have further reduced the potential for implicit guarantees and the transmission of financial risks. China's closer alignment with international regulatory standards has also strengthened banks' asset-quality recognition and practices in risk management and capital management, the agency said.
Meanwhile, slower credit expansion and the accelerated consolidation of smaller banks have helped reinforce lending discipline and mitigate risk.
Fitch added that the moderation in credit growth and improvements in credit structure reflected regulators' efforts to curb excessive lending and foster more sustainable economic growth. These developments should help contain systemic risks and stabilize leverage levels over the medium term.
jiangxueqing@chinadaily.com.cn
