China’s Commercial Banks See YoY Profit Growth of 2.4% in First Quarter, NPL Ratio Eases to 1.8%


The latest official data points to modest growth in the net profits of the Chinese commercial banking sector in the first quarter of 2021, alongside a decline in non-performing loan (NPL) ratios.

In the first quarter Chinese commercial banks realised net profits of 614.3 billion yuan (approx. USD$95.41 billion) for YoY growth of 2.4%, according to data recently released by the China Banking and Insurance Regulatory Commission (CBIRC).

China’s 38 A-share banks posted an even stronger performance, with net profits attributable to shareholders seeing a YoY increase of 4.62%, and only two lenders failing to make YoY gains in the first quarter.

As of the end of the first quarter of 2021 the core tier-1 capital adequacy ratio of the Chinese commercial banking sector was 10.63%, for a decline of 0.09 percentage points compared to the end of last year.

The tier-1 capital adequacy ratio was 11.91%, for a decline of 0.12 percentage points, while the capital adequacy ratio was 14.51%, for a decline of 0.19 percentage points.

Data from iFinD further indicates that the average capital adequacy ratio of China’s listed banks was 13.98% as of the end of the first quarter, for a decline of 0.23 percentage points compared to the end of last year.

The non-performing loan (NPL) balance of Chinese commercial banks stood at 2.8 trillion yuan as of the end of the first quarter of 2021, for an increase of 86.8 billion yuan compared to the end of last year.

The commercial bank NPL ratio was 1.8%, for a decline of 0.04 percentage points, as Chinese banks stepped up efforts to write-off dud debts.

China’s 38 listed banks had an NPL ratio of 1.33% at the end of the first quarter, for a decline of 0.04 percentage points, with 26 of these lenders, or nearly 70% of the total, seeing NPL ratios ease.

Wang Yifeng (王一峰), chief financial sector analyst with Everbright Securities, said to Securities Daily that the rewarming of the Chinese economy would lead to further improvements in the asset quality of banks in 2021.



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