Five Major Chinese State Banks Report Strongest Profit Growth Since 2021

Five of the largest state-owned banks in China reported their fastest quarterly profit growth since 2021 or 2022, with net profit increases ranging from 6% to 11%. China Construction Bank, the Industrial and Commercial Bank of China, the Bank of Communications, and the Agricultural Bank of China each saw growth of approximately 10%. The Bank of China reported a slower increase of 6.4%, attributed to trade tensions and foreign exchange swings.

Earnings were supported by steady asset quality and stabilizing net interest margins. Gains were further bolstered by equity investments in the chip sector, specifically following the July IPO of CXMT Technology, as well as bond gains. China Construction Bank specifically increased its lending to science and technology firms during this period.

Despite these gains, the banks face ongoing headwinds from a slowing economy and weak credit demand. Analysts have warned of emerging risks regarding volatility in equity markets and loans directed toward technology and innovation sectors.