16 Re­gional Banks in China Post Neg­a­tive Net Profit Growth in First Half of 2020

The net prof­its of Chi­na’s re­gional banks have fal­tered se­verely in the first half of 2020, as the COVID-9 pan­demic fur­ther ex­ac­er­bated is­sues that came to the fore in the sec­tor last year.

As of 23 July 26 small and medium-sized re­gional Chi­nese banks had re­leased their 2020 first half per­for­mance re­ports, of which 16 saw neg­a­tive growth in net prof­its.

Only seven banks saw year-on-year gains in net prof­its, while only one bank – Fos­han Rural Com­mer­cial Bank – posted dou­ble digit growth.

Out of the 16 banks which saw neg­a­tive profit growth in the first half of the year six saw de­clines in ex­cess of 30%, in­clud­ing Shanxi Yux­ian Rural Com­mer­cial Bank , Shan­dong Laizhou Rural Com­mer­cial Bank, Zhao­qing Rural Com­mer­cial Bank , Hubei Suizhou Rural Com­mer­cial Bank, Bank of Hubei and Jilin Huancheng Rural Com­mer­cial Bank .

One member of the rural bank­ing sec­tor said to state-owned media that perorations had been especially difficult since the first quarter due to the im­pact of the COVID-19 pandemic, putting even greater pressure on smaller-scale lenders.

Reg­u­la­tors have been highly con­cerned about the un­cer­tain health of Chi­na’s re­gional banks since May 2019, when the prob­lems of In­ner Mon­go­li­a’s Baoshang Bank prompted Bei­jing to launch a forcible takeover.

A report from S&P Global indicates that in the first quarter mu­nic­i­pal commercial banks saw the fastest rise in non-performing loans (NPL), with a rise to 2.45% by the end of March as compared to 1.88% a year previously .

Posted by China Bank­ing News