ICBC and Bank of China report improved profits in Q2

Big Four banks boosted by sharp spike in fees.

Industrial and Commercial Bank of China Ltd and Bank Of China Ltd both reported better-than-expected second-quarter profit growth on steady net interest margins and a jump in fees.

ICBC posted net profit of US$11.4 billion for the second quarter, up 12.5% from a year earlier. ICBC is the world's largest bank by market capitalization and China’s largest bank.

BOC reported quarterly net profit of US$6.7 billion up 17%. It is China's fourth-largest lender.

Profit growth at most Chinese banks has decelerated this year as new loan growth weakened while profit margins are threatened by policy moves to allow banks to offer higher rates on customer deposits.

The China Banking Association said last month it expects net profit growth for China's 17 listed banks to slow to 8% in 2013 from 19% in 2012.

ICBC's net interest margin, or the difference between the interest rate that banks pay for funds and the rates they charge to borrowers for loans, was 2.57% in the first half. BOC reported its net interest margin at 2.23% in the first half, up one basis point from 2.22% in the first quarter.

ICBC, however, reported that overdue loans not designated as NPLs rose to US$11.3 billion, or 0.73% of all loans, from 0.71% in 2012.