Chinese Commercial Banks See First Half Net Profits Rise 11.1%, NPL Ratio Edge Lower

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The profits of China’s commercial banks saw an increase of over 11% in the first half of 2021 compared to the same period last year, according to a report from the peak body for the industry.

Commercial banks in China posted net profits of 1.1 trillion yuan in the first half of 2021, for a YoY rise of 11.1%, according to the “2021 China Banking Sector Development Report” (2021年度中国银行业发展报告) released by the China Banking Association (CBA) on 31 August.

As of the end of June 2021 banking sector financial institutions in China had total assets of 336 trillion yuan, for a YoY rise of 8.6%.

The non-performing loan balance of commercial banks was 2.8 trillion yuan, while the non-performing loan ratio of Chinese commercial banks stood at 1.76%, for a decline of 0.05 percentage points compared to the end of the previous quarter. The special mention loans ratio was 2.36%.

“In 2021, following the stable growth of the Chinese economy, demand for credit from enterprises has thrived,” said the Report.

The first half saw new loans of 13.5 trillion yuan, including 1.7 trillion yuan in manufacturing sector loans, and 3.03 trillion yuan in loans related to the agricultural sector. Green lending by major banks increased by more than 1 trillion yuan, while financial inclusion loans to micro and small-enterprises increased by 16.4% compared to the start of the year, and loans to private enterprises rose 8.6%.

The average interest rate for new financial inclusion loans to micro and small-enterprises fell by 0.23 percentage points compared to the same period last year.

The CBA report forecasts “rational and moderate growth” in credit extension in the second half, as well as “steady growth in the balance sheet of the Chinese banking sector, further structural optimisation, further stabilisation of the net interest spread, and continued improvements to earnings levels and asset quality.”

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