Industrial & Commercial Bank of China Ltd. (601398) led the nation’s biggest banks in posting faster-than-estimated second-quarter profit growth by containing bad loans and selling more wealth management products.
The four banks, among the world’s nine biggest by market value, reported record combined net income of 216 billion yuan ($35.2 billion), an increase of 15 percent from a year earlier, according to data compiled by Bloomberg News. That accelerated from an 11 percent increase in the first quarter.
China’s biggest banks defied the earnings slowdown seen at smaller rivals by boosting higher-yield loans to small firms while stepping up credit-risk management and bad loan recovery. Their shares are still trading near record-low valuations on concern that an economy set to expand at the weakest pace in 23 years will curb loan demand and spark more defaults.
“It’s comforting to see that the big four banks managed to maintain liquidity and earnings ability in the current operating environment,” Chen Xingyu, a Shanghai-based analyst at Phillip Securities Research, said by phone yesterday. “While the banking industry’s profit keeps rising, the growth rate is slowing. The biggest risk going forward is still the worsening asset quality.”
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