Chinese state banks’ 2024 profits rise and bad loans dwindle even as margins narrow

All six state-owned commercial banks posted moderate profit growth for last year, as non-performing loan ratios declined slightly

Reading Time:3 minutes

A branch of the Industrial and Commercial Bank of China (ICBC) in Beijing on April 1, 2019. Photo: Reuters

Published: 6:30pm, 28 Mar 2025Updated: 6:32pm, 28 Mar 2025

Chinese banks are reporting higher profits and smaller bad debts, helped by the central bank’s flexibility on how lenders provide a cushion for their non-performing loans (NPLs), as well as a capital replenishment plan from the government.

All six of China’s state-owned commercial banks posted moderate growth in net profit last year, while their NPL ratios – a key indicator of asset quality and credit risk – declined slightly.

Net interest margins (NIMs), which represent the difference between the lending and savings rates, tightened to less than 1.8 per cent, indicating that banks’ profitability was being squeezed.

Bank of China, the country’s international lender, kicked off the results season this week when it reported a 2.6 per cent increase in 2024 profit to 237.8 billion yuan (US$33 billion). NPL shrank to 1.25 per cent from 1.27 per cent, while its margin tightened by 0.01 percentage points to 1.27 per cent.

A China Construction Bank (CCB) branch in Beijing on November 5, 2020. Photo: EPA-EFE

Bank of Communications followed with a net profit of 93.59 billion yuan, up about 0.09 per cent year on year. The Shanghai-headquartered bank saw its NPL ratio fall to 1.31 per cent from 1.33 per cent, while its NIM slipped to 1.27 per cent from 1.28 per cent.