Profits of China’s big banks grow despite deleveraging campaign

Three of China’s “big four” state-run commercial banks reported year-on-year profits growth above 5% for the first half of 2018, suggesting that they have an advantage over smaller competitors that are struggling due to the country’s crackdown on financial risk, Caixin reports.

China Construction Bank reported profits were up 6.5%, while Bank of China’s profits rose 5.2% and Agricultural Bank of China saw profit growth of 6.7%. Industrial and Commercial Bank of China is due to report its latest earnings on Thursday.

The reason for the banks’ strong performance is likely to be their access to cheap funding due to their large deposit bases. Smaller banks without this advantage have found life difficult as their access to off-balance-sheet funding channels has been squeezed during the deleveraging drive.