Chinese commercial banks' profit up 4.72% to $273b in Q4

The sector’s bad loans ratio fell mildly to 1.83%.

The profits of Chinese commercial banks rose 4.72% to $273b (CNY1.83t) in Q4 2018, data from China Banking and Insurance Regulatory Commission show. 

Also read: Chinese commercial banks' profit up 6.37% to $149.58b in H1 2018

In a positive development, the sector's non-performing loan (NPL) ratio fell 0.04 percentage points QoQ to 1.83% by end-December. Outstanding bad loans dropped $1.02b (CNY6.8b) from the previous quarter to $303.33b (CNY2.03t).

The asset quality of China’s commercial banks is likely to stabilise in the near term with the bad loan ratio tipped to stay below 1.9%, according to an earlier report from Xinhua News Agency which cited a report released by the Bank of Communications.

The country's megabanks, joint stock banks and city commercial banks are weathering the bad loan crunch better than their rural peers who have been bearing the brunt of deteriorating asset quality brought about by the country’s economic slowdown and ongoing deleveraging campaign. In Q1 2018, the bad loan ratio of rural commercial banks hit 3.26% raising concerns about a looming bailouts in the form of forced mergers or share capital injections.

Meanwhile, the total assets held by banking institutions rose 6.3% YoY to $40.05t (CNY268t) in 2018. The lenders' liabilities rose 5.9% YoY to $36.91t (CNY247t) in Q4 2018.