China's Big Five banks post slimmer margins as economic challenges persist

Reuters

29-04-2025

Summary
Companies
China's Big Five banks log thinner margins
First-quarter profits fall for three lenders on year
Non-performing loan ratios mostly flat
SHANGHAI/HONGKONG, April 29 (Reuters) - China's Big Five lenders reported narrower margins at the end of the first quarter on Tuesday, as profits fell for some on the slowing economy under the shadow of rising tariffs.
As the property sector continues to struggle, developer defaults are also weighing.
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"In the first quarter of 2025, the global economy lacked strong growth momentum," said China Construction Bank Corp (601939.SS), opens new tab, in its first-quarter results, where it posted a 4% fall in net profit from a year before.
"The prospects for global trade growth encountered numerous challenges, including rising tariffs."
America and China are locked in a tit-for-tat tariff war which has increased business volatility and reduced trade between the nations.
Industrial and Commercial Bank of China (ICBC) (601398.SS), opens new tab, the world's largest lender by assets, and Bank of China (601988.SS), opens new tab followed suit, posting first-quarter profit drops of 4% and 2.9% respectively from a year before.
All three lenders saw falling margins.
"Growth of micro and small enterprises (MSE) loans is slowing, but remains rapid. We expect the related asset risks to gradually emerge in step with the slowdown of economic growth facing the headwind of tariff shocks," said Nicholas Zhu, an analyst at Moody's.
While China's Bank of Communications (BoCom) (601328.SS), opens new tab, and Agricultural Bank of China (AgBank) (601288.SS), opens new tab logged slight rises in first-quarter net profit of 1.5% and 2.2% respectively, margins also fell at both lenders.
For all banks, non-performing loan ratios remained either steady or fell slightly. But in the coming months, NPLs across the board are likely to rise.
"Asset risks will be high, because of unseasoned risks from financing China's economic transition to high-end manufacturing, technology and clean energy industries," said Zhu.
($1 = 7.2682 Chinese yuan renminbi)