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China’s big banks beat profit estimates as bad loans curbed

Bloomberg Published on Wed, Aug 30, 2017 / 9:34 PM GMT+8

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(Aug 30): Resilient economic growth and a government campaign against excessive leverage are helping China’s largest banks, curbing their bad loans and underpinning their net interest margins.

Those factors helped the four biggest banks post higher-than-estimated second-quarter net income, led by Bank of China’s 23% surge, the biggest increase in six years. Bigger rivals Industrial & Commercial Bank of China, China Construction Bank Corp. and Agricultural Bank of China posted an average gain of 3.5%, according to figures derived from first-half earnings reported to Hong Kong’s exchange on Wednesday.

China’s economic recovery has bolstered the firms, which control about a third of the nation’s US$36 trillion of banking assets. What’s more, as interbank lenders, their interest margins have benefited from the government’s campaign against financial leverage, which has driven up the rates that banks pay to borrow from each other.