The Six Major Banks "Submitted Their Reports"; What's the Next Step Development? Performance Briefings Release New Signals

Zhang Yu, executive editor at Yicai

Stating that "Letting the real economy benefit more" echoing with "narrowing interest margin", the six major state-owned banks convened their annual performance briefings from March 21 to April 2 in succession, focusing on "steady growth," "serving the real economy," and "risk prevention and control", revealing their development trajectories through data.

Where is the Source of the Capital? The Dynamics of Narrowing Net Interest Margins

The large state-owned banks have demonstrated resilience through their scale and scope effects, with the total assets of the six major banks nearing 200 trillion yuan by the end of 2024. The Industrial and Commercial Bank of China Limited took the lead with 48.82 trillion yuan in assets, while Agricultural Bank of China Limited and China Construction Bank Corporation both surpassed 40 trillion yuan. Postal Savings Bank of China Co., Ltd., after nine years of being publicly listed, has seen substantial growth in both assets and liabilities.

The six major banks have high-quality assets, with non-performing loan ratios sitting at 1.34%, 1.30%, 1.34%, 1.25%, 1.31%, and 0.90%, respectively, and relatively high provision coverage ratios. For instance, China Construction Bank Corporation proactively managed its asset quality, leading to improved efficiency in risk asset disposals. In terms of profitability, the six major banks reported a net profit attributable to their parent companies exceeding 1.4 trillion yuan, a year-on-year increase of 1.8%.

In the face of challenges like the LPR adjustments, the six major banks have experienced a contraction in net interest margins. However, they have stabilized their positions by optimizing asset-liability structures and diversifying non-interest income channels. Several banks forecast a narrowed decline in net interest margins by 2025. They plan to stabilize these margins by implementing strategies on both the asset and liability fronts and enhancing proactive management.

Where Is the Destination of the Capital? The Confidence Behind the Real Economy

Bank credit loans are directed towards sectors like technology and green industries, supporting economic transformation and upgrading. Some banks have reported double-digit growth in loans related to strategic emerging industries, with China Construction Bank Corporation, Bank of China Limited, and Agricultural Bank of China Limited reporting growth rates of 26.63%, 26.31%, and 22.4%, respectively. The loan balance for strategic emerging industries at Industrial and Commercial Bank of China Limited has exceeded 3.1 trillion yuan, placing the bank at the forefront among its peers. Bank of Communications Co., Ltd. has innovated its credit granting model to support technology enterprises.

In the private economy sector, these banks continue to provide stable and effective credit support. By the end of 2024, the Agricultural Bank of China Limited's loan balance for private enterprises reached 6.53 trillion yuan; the Industrial and Commercial Bank of China Limited's investment and financing total in the non-public sector exceeded 7.5 trillion yuan; the Bank of China Limited's private enterprise loan balance was 4.42 trillion yuan and continued to grow.

In the field of agriculture, farmers, and rural areas as well as county-level area, Agricultural Bank of China Limited saw significant growth in county-level loans and deposits, with county-level loan balances reaching 9.85 trillion yuan. Postal Savings Bank of China Co., Ltd. reported an agricultural loan balance of 2.29 trillion yuan, with an annual growth rate of 12.5%, actively contributing to rural revitalization efforts.

What's the Next Step Development? Performance Briefings Release New Signals

Regarding credit loan placement, Bank of Communications Co., Ltd. has established plans for “growth in total volume, optimized structure, and steady operation,” while Agricultural Bank of China Limited anticipates balanced growth in loan volume throughout the year. Bank of China Limited expects a steady increase in domestic RMB loan increments, while Postal Savings Bank of China Co., Ltd. will increase lending in technology innovation, inclusive finance MSEs, and "agriculture, rural areas and farmers" sectors.

In terms of global operations, the Industrial and Commercial Bank of China Limited will establish a comprehensive service system for cross-border e-commerce to provide settlement and sales services for 45 minor currencies. Bank of China Limited will strengthen its cross-border business advantages by enhancing proactive services for new foreign trade formats such as cross-border e-commerce, overseas warehouses, and intermediate goods trade.

In housing finance, the banking sector is committed to comprehensively supporting residential housing needs. China Construction Bank Corporation leads its peers in the scale of personal housing loans and aims to ease customers' installment repayment pressure by optimizing the repayment plan in the future.

The above information is provided for reference purposes only and does not constitute investment advice.