HKG:3988

China's Big Four Banks Let Credit Costs Eat Into First-Half Profits Even as Revenues Jump

Industrial and Commercial Bank of China (HKG:1398, SHA:601398), China Construction Bank (HKG:0939, SHA:601939), Agricultural Bank of China (SHA:601288, HKG:1288) and Bank of China (SHA:601988, HKG:3988) all posted stronger revenue in the first half versus a year earlier, but all four booked higher credit impairment losses, limiting profit growth to low single digits.Attributable profit at ICBC, China's largest commercial bank, rose 3.3% to 173.7 billion yuan as operating income climbed 9.1% to 446.2 billion yuan.However, credit impairment losses ballooned 22% to 127 billion yuan, accounting for about 28% of the lender's revenue during the period.The same trend happened at CCB, where attributable profit rose only 4.6% to 169.6 billion yuan as credit impairment losses swelled by 21% to 130 billion yuan, offsetting the 10.5% jump in operating income to 426.3 billion yuan.At AgBank, attributable profit inched up 4.9% to 146.4 billion yuan. Operating income climbed 11% to 411.1 billion yuan, while credit impairment losses widened 13% to 110.6 billion yuan.BOC also posted a modest profit growth of 5.1% to 123.6 billion yuan, or 0.36 yuan per share. Operating income edged up 8.4% to 357.1 billion yuan, while credit impairment losses surged to 68.1 billion yuan from 56.5 billion yuan a year earlier.Net interest income, which still accounts for the bulk of the banks' revenues, grew across the board, with AgBank reporting the sharpest increase at 10.5%.However, three of the "Big Four" banks reported lower net interest margin in the first half versus a year earlier. For AgBank, the lender attributed the decline to "a decrease in the yield of interest-earning assets as a result of our support for the development of the real economy and the decline in interest rates."Only BOC reported an increase in net interest margin in the first half versus a year earlier. However, the company flagged a drop in the average interest rate of its interest-earning assets, which it attributed to factors such as the repricing of domestic RMB loans after last year's reduction of the domestic RMB loan prime rate and the decline in market interest rates.In terms of asset quality, all four banks reported lower non-performing loan ratios (NPLs) in the first half versus the end of 2025. Only AgBank reduced its allowance to NPLs in the first half.On shareholder returns, each bank's board proposed an interim dividend for 2026: ICBC at 0.1511 yuan per share, CCB at 2.01 yuan per 10 shares, AgBank at 1.297 yuan per 10 shares, and BOC at 1.19 yuan per 10 shares.