Catenaa, Monday, November 02, 2026- China’s largest state-owned banks reported their fastest quarterly profit growth in four years, despite an economic slowdown.
China’s five leading state-controlled banks recorded third-quarter earnings increases of 6.4% to 10.8%, as easing funding costs and relatively stable loan portfolios helped profitability withstand the broader economic slowdown, Reuters reported.
Lower interest expenses helped improve bank profitability as previously issued, higher-rate deposits were renewed at cheaper rates. Analysts cited by Reuters expect this benefit to weaken towards year-end, although monetary measures and mortgage subsidies could provide further support.
That benefit is fading in the second half, but recent monetary easing and mortgage interest subsidies help lower funding costs and support margins, analysts told Reuters.
According to Reuters, Industrial and Commercial Bank of China reported on Friday that third-quarter net profit rose 10% year on year.
Meanwhile, Agricultural Bank of China, China Construction Bank and Bank of Communications reported similar net profit growth rates of 10.8%, 9.8% and 10.1%, respectively.
Bank of China, with the greatest overseas exposure among the big five, reported a comparatively slower 6.4% growth amid trade tensions and foreign exchange swings, Reuters reported.
Latest earnings show China’s biggest lenders are recovering from years of profit-margin pressure driven by the country’s property crisis, as the economic slowdown has weakened borrowing demand.
Policymakers stepped up targeted monetary support in September, which modestly improved credit demand. But analysts told Reuters that the measures are unlikely to drive a significant recovery in lending or notably lift mortgage growth.
“China’s economy maintained overall stability, moving towards innovation and upgrading, with relatively fast growth in production and supply, strong foreign trade growth, and new achievements in high-quality development,” CCB’s Management said in a company filing, according to Reuters.
“However, it still faces difficulties and challenges such as strong supply and weak demand,” it said.
The five lenders’ net interest margins remained stable in the third quarter, as ICBC, AgBank and BOC’s margins were unchanged, while BoCom’s rose. CCB said its NIM slightly fell to 1.36%.
“An earlier-than-expected recovery in NIM, combined with broadly stable credit costs, positions these banks for a faster profitability rebound compared to smaller banks in the sector,” said Elaine Xu, a director at Fitch Ratings, told Reuters.
“Their strong access to high-quality central and local state-owned enterprise (SOE) borrowers provides a more favourable risk-adjusted return relative to most domestic peers,” Xu told Reuters.
Asset quality remained largely unchanged across China’s five leading state-owned banks during the third quarter. Although lenders continued reducing their troubled-loan exposure, analysts warned that consumer credit quality could face further pressure.
According to Reuters, ICBC, CCB and BOC said the NPL ratios remained flat at the end of September compared with three months earlier. AgBank and BoCom fell slightly to 1.23% and 1.29%, respectively.
Impairment charges rose as lenders replenished loan-loss provisions while revenue recovered.
