China’s banks post weakest results in years

Due to interest rate liberalization and weak economy.

Experts said that 15 of 16 Chinese listed banks that had released interim results posted a total first-half net profit that rose 13.6% percent year-on-year to US$100.8 billion.

The growth rate however, was significatly below the 18% average recorded last year, said Guo Tianyong, director of the Research Center of the Chinese Banking Industry at the Central University of Finance and Economics.

The center had predicted the growth of banks' profits at between 10% 15% this year, as economic and policy uncertainties continue to rise. In 2014, growth might even drop to 8% or 9%.

Industrial and Commercial Bank of China Ltd, China’s largest lender and the world's most profitable bank, said last week it achieved first-half net profit of US$22.6 billion, up 12.4%. Bank of China Ltd reported a net profit of US$13.2 billion, up 12.9%.

Joint-stock lenders registered the highest increases in net profit despite the industry as a whole posting its 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 Corporation all achieved profit growth rates of some 20%.

Analysts believe the trend of narrowing net interest margins, an indicator of bank profitability, will continue as China continues liberalizing interest rates.