In the first quarter of this year, the financial reports of six state-owned banks in China showed a decrease in net profit of approximately 7.3 billion yuan compared to the same period last year. At the same time, the net interest margin continued to decline from the end of last year.
According to a report by “Financial First” on April 30th, by the evening of March 29th, China’s six major state-owned banks (Industrial and Commercial Bank of China, Agricultural Bank of China, Bank of China, China Construction Bank, Bank of Communications, Postal Savings Bank of China) had successively released their reports for the first quarter of this year.
The reports indicated that in the first three months of this year, the six major banks collectively achieved revenues of about 910.2 billion yuan, a decrease of 13.9 billion yuan year-on-year, with a net profit of 344.4 billion yuan, earning approximately 7.3 billion yuan less compared to the same period last year. Industrial and Commercial Bank of China saw a 3.2% decline in quarterly revenue compared to the same period last year, while China Construction Bank’s revenue decreased by 5.4% to 190.07 billion yuan year-on-year.
In terms of profitability, in the first quarter, the six major banks collectively realized a net profit of 344.42 billion yuan, earning approximately 7.34 billion yuan less than the same period last year, a decrease of around 2%. Industrial and Commercial Bank of China reported a net profit of 84.156 billion yuan, while China Construction Bank’s quarterly net profit was over 80 billion yuan. However, both saw a nearly 4% decrease compared to the same period last year, while the year-on-year decline in the first quarter of 2024 was within 3%.
Additionally, Bank of China and Postal Savings Bank of China also saw a 2.9% and 2.62% year-on-year decline in net profit, respectively, with the former maintaining a similar decline to the same period last year, and the latter seeing a further widening decline. Agricultural Bank of China and Bank of Communications maintained positive profit growth, with Agricultural Bank of China leading with a 2.2% increase in net profit, compared to a 1.63% decline in net profit in the same period last year.
As for the reasons behind the year-on-year decline in bank profits in the first quarter, the report cited factors including concentrated loan repricing exacerbating interest margin pressure, a slowdown in asset expansion, increased income tax rates, weakening of provision support, and increased volatility in non-interest income.
Among them, the net interest margin, as a major source of bank profits, showed varying degrees of decline. Postal Savings Bank of China, Bank of China, and China Construction Bank all saw a decrease of more than 10 basis points in the net interest margin in the first quarter compared to the end of last year, with declines of 16 basis points, 11 basis points, and 10 basis points, respectively. The net interest margin of major banks has all fallen below 1.8%, with Postal Savings Bank of China at 1.71% and Bank of Communications at 1.23%. The narrowing of the net interest margin directly led to a decrease in net profit.
The net interest margin is the ratio of a bank’s net interest income to all interest-bearing assets held by the bank.