China’s big six state-owned banks saw solid growth in profits in 2022, despite the adverse economic impacts of a renewed round of Covid-related lockdowns.
Available performance data indicates that the total net profit attributable to the parent companies of the big six state-owned banks for the first three quarters of 2022 surpassed the one trillion threshold to reach 1.03 trillion yuan. This amount marked an increase of 6.47% compared to the same period in 2021.
“The overall profit growth of the banking sector has enriched capital adequacy ratios and built a ‘reserve force’ in the face of uncertainties and challenges in the economy, enabling the banking sector to more fully support the development of the real economy,” said Ye Huaibin (叶怀斌), a researcher at the Bank of China Research Institute.
“The profit growth of commercial banks has a positive foundation of reducing the financing costs of the real economy, while steadily growing the scale of balance sheets.
“The big state-owned banks are the cornerstone of the banking system. The continuous improvement of the profitability of large banks will help maintain the stability of the banking system and further consolidate the foundation for the smooth operation of the banking sector as a whole.”
Official data indicates that as of the end of September 2022, the total loan balance (corporate loans and advances) of the big six state-owned banks exceeded the 90 trillion threshold to hit 92.05 trillion yuan, for an increase of 11.30% compared to the end of 2021.
Ye Huaibin also highlighted efforts by Chinese regulators to drive the big state-owned banks to better service the needs of China’s real economy.
“Servicing the real economy is the original purpose of commercial banks. For a long time, the banking sector has been committed to improving the ability and level of services for the real economy, providing credit support to key areas and weak linkages of the real economy, and continuously optimizing the credit structure.
“There have been considerable accomplishments with regard to implementing national strategy, increasing support for key areas such as the Yangtze River Delta, the Guangdong-Hong Kong-Macau region and the Beijing-Tianjin-Hebei region, and increasing financial support that focuses on the high-quality development of the service manufacturing industry, as well as continuing to increase support for small and micro enterprises, the private economy, and agriculture-related economies.”
The health of China’s big state-owned banks also improved in 2022. As of the end of September 2022, the non-performing loan (NPL) ratios of five out of the six big state-owned banks had all declined to varying degrees compared with the start of that year, and were far lower than the average NPL ratio of 1.74% for China’s banking-sector financial institutions for the period.