China's BoCom bank Jan-June profit drops 14.6%, first H1 profit fall since listing


BoCom's H1 profit 36.5 bln yuan vs 42.75 bln yuan year-ago

Bad loans rise

NIM 1.53 pct end-June vs 1.55 pct end March

Adds details

BEIJING/SHANGHAI, Aug 28 (Reuters) - Bank of Communications Co Ltd 601328.SS3328.HK, China's sixth-largest bank by assets, reported on Friday a 14.6% decline in first-half profit as sour debt rose amid the coronavirus pandemic.

It was the first time the bank has reported a profit fall in the January-June period since it publicly listed its shares in Shanghai in 2007.

The results highlight the impact of the pandemic and the slowing economy on Chinese banks after they bucked the global trend in the first quarter by posting higher quarterly profits and steady bad loans.

BoCom is the first of China's largest state-owned banks to report half-year earnings.

Profit came in at 36.5 billion yuan ($5.32 billion) for January-June, compared to 42.75 billion yuan a year earlier, the bank said in a statement to the Hong Kong stock exchange.

That implied a second-quarter net profit of 15.1 billion yuan, down 30.6% versus a year earlier, Reuters calculations show.

China's top banking watchdog has asked state lenders to fully recognise bad loans on balance sheets and increase their buffers for covering souring debt in the first half, weighing on their profits, people familiar with the matter have said.

During the reporting period, BoCom disposed of non-performing loans totalling 34.3 billion, an increase of 25% on a year-on-year basis.

The state-owned lender's non-performing loan ratio rose to 1.68% at end-June from 1.59% at end-March.

Meanwhile, its net interest margin, a key gauge of profitability, fell to 1.53% by end-June from 1.55% at end-March.

Chinese commercial banks overall posted a 9.4% drop in first half net profit to 1 trillion yuan, according to data from the China Banking and Insurance Regulatory Commission (CBIRC).

By the end of the June quarter, the average non-performing loan ratio for commercial banks was at 1.94%, CBIRC data showed, the highest since the global financial crisis.

($1 = 6.8644 Chinese yuan renminbi)

(Reporting by Cheng Leng and Zhang Yan in Beijing, Engen Tham in Shanghai; Editing by Himani Sarkar, David Evans and Kim Coghill)

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