Tougher environment takes toll on bank results

Chinese banks are reporting their weakest results in years as the economy slows and interest rate liberalization speeds up, and challenges are set to continue amid rising uncertainties, analysts said.

As of Thursday, 15 of 16 Chinese listed banks had released interim results. Their total first-half net profit was up 13.6 percent year-on-year to 616.9 billion yuan ($100.8 billion).

The growth rate was markedly below the 18-percent average recorded last year, though it fell within expectations, said Guo Tianyong, director of the Research Center of the Chinese Banking Industry at the Central University of Finance and Economics.

"We predict the growth of banks' profits will stand between 10 and 15 percent this year, as economic and policy uncertainties are rising. In 2014, it might even drop to 8 or 9 percent," he said.

Industrial and Commercial Bank of China Ltd, the nation's largest lender and the world's most profitable bank, said on Thursday it achieved first-half net profit of 138.5 billion yuan, up 12.4 percent.

Bank of China Ltd made 80.7 billion yuan, up 12.9 percent, according to its interim results released on the same day.

Joint-stock lenders registered the highest increases in net profit, even as the industry as a whole experienced the lowest profit growth in nearly four years.

Bank of Beijing Co Ltd, Industrial Bank Co Ltd, Bank of Ningbo Co Ltd, Hua Xia Bank Co Ltd and China Minsheng Banking Corp all achieved profit growth rates of more than 20 percent.

Bank of China President Li Lihui said on Thursday at a news briefing in Hong Kong that the trend of narrowing net interest margins, an indicator of bank profitability, would continue as China continues freeing up interest rates.

"For us, the NIM might be stable or decline in the second half. But for the full year, it may continue to widen as long as we accelerate asset turnover and strengthen reasonable allocation of our credit resources."