SHANGHAI/BEIJING – Five of China’s largest lenders posted shrinking margins in the first quarter on Friday, as loan re-pricing bites.
Borrowers are struggling to repay loans after three years of China’s zero-COVID policy hit the economy and Beijing has put pressure on lenders to reduce individual and company debt burdens by cutting interest rates.
Industrial and Commercial Bank of China (ICBC), the world’s largest commercial lender by assets, posted a net interest margin (NIM) – a key indicator of bank profitability – of 1.77 percent at the end of March, down from 1.92 percent from the end of the prior quarter.
Following suit were Agricultural Bank of China Ltd (AgBank), Bank of China (BoC), China’s Bank of Communications Co Ltd (BoCom) and China Construction Bank Corp (CCB), all posting dips in their NIM.
And the trend looks set to continue this year.
“Chinese banks are likely to see further pressure on NIM, driven by mortgage repricing to reduced rates and ongoing deposit competition, as well as continued policy directives on reducing borrowers’ costs especially for micro-and small enterprises,” said Elaine Xu, Director of APAC Financial Institution, Fitch Ratings. – Reuters
