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China's AgBank posts 14per cent third-quarter profit increase

China's AgBank posts 14per cent third-quarter profit increase

FILE PHOTO: A sign of Agricultural Bank of China is seen at its office building in Beijing, China March 29, 2021. REUTERS/Tingshu Wang

BEIJING/SHANGHAI : Agricultural Bank of China Ltd (AgBank), the country's third-biggest lender by assets, reported a 14per cent increase in third-quarter profit as banks steadily recover from the impact of the COVID-19 pandemic.

Net profit rose to 64.4 billion yuan (US$10.07 billion) for the July-September quarter from 56.5 billion a year earlier, it said in an exchange filing on Thursday.

The bank reported a 1.48per cent non-performing loan ratio at the end of the third quarter, compared with 1.5per cent at the end of the previous quarter.

Net interest margin - a key indicator of bank profitability - was 2.12per cent at the end of the third quarter, the same as the level at the end of the second quarter before.

Bank of China, one of the big four state lenders, said in a recent research note that China's commercial banks are likely to post quarterly profit growth of about 3per cent in the June-September quarter, reflecting a steady recovery from the pandemic.

Most big state lenders recorded their worst ever first-half performance as the coronavirus pandemic got underway early last year, before they managed to eke out a small profit increase for 2020 and stabilised further in the first two quarters of 2021.

But the sector will nonetheless come under pressure from declining loan rates, requirements to set aside more loan-loss provisions, and challenges faced by non-interest earning businesses, according to the Bank of China report.

China's banking sector saw its bad-loan ratio rise to 1.87per cent at end-September versus 1.86per cent three months earlier as the impact of the pandemic lingered, the sector's regulator said.

While China's biggest banks will not give a breakdown of lending to the property sector in their third-quarter reports, as fears of contagion from any default by China Evergrande Group have mounted, some banks, insurers, and shadow banks stopped offering new credit to property developers, and ran urgent checks on their exposure to the sector.

(Reporting by Cheng Leng, Zhang Yan and Engen Tham; editing by Jason Neely)

Source: Reuters

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