China’s commercial banks reported a 9.4% decline in first half net profits to RMB 1 trillion ($143 billion), reflecting the impact of the Covid-19 pandemic, data from the China Banking and Insurance Regulatory Commission (CBIRC) showed Monday, reported Caixin.
The CBIRC didn’t provide a breakdown of the quarterly profit figure, but a Caixin calculation based on previously released figures showed that the second-quarter profit of commercial banks dropped 28.4% from a year ago. The bad-loan ratio increased by 0.03 of a percentage point from the first quarter to 1.94% at the end of the second quarter while provision coverage for risky assets declined 0.8 of a percentage point to 182.4%.
Total assets of Chinese banks rose 9.7% in the second quarter to RMB 309 trillion, CBIRC data showed. The latest figures reflect the unfolding impact of the pandemic on China’s banking sector. Regulators earlier warned of rising risks and business pressures after the upbeat first quarter.
While the overall bad loan ratio remains stable, experts said big banks are facing greater challenges as the main supporters of small and micro businesses, which have been hit hard by the pandemic.