THREE of China’s top-five banks have reported near flat first-half profit growth as the difference between interest earned on loans and paid to depositors shrank.

    Agricultural Bank of China Ltd. (AgBank), the nation’s third-biggest lender by assets, Friday posted a slight 0.8 percent rise in first-half net profit as successive interest rate cuts and tax reforms slashed interest income.

    Lending margins, the difference between interest earned on loans and paid to depositors, also shrank at China Construction Bank Corp. (CCB) and Bank of Communications Co. (BoCom), which reported first-half earnings Thursday.

    AgBank, BoCom and CCB, like their rivals, have faced a rise in borrowers struggling to repay loans amid a slowing economy, while successive benchmark interest rate cuts by the central bank have eroded net interest margins.

    That has forced lenders to employ other tactics to maintain profitability, such as cutting the amount of cash set aside for future losses, or issuing asset-backed securities.

    The poor performance of domestic banks in the first half would raise the prospect of the government injecting more than US$100 billion to shore them up, some analysts have said.

    Meanwhile, BoCom’s margin shrank to 1.97 percent as at the end of June from 2.01 percent three months prior.

    For CCB, the country’s second-biggest lender by assets, margins narrowed to 2.32 percent by end-June, from 2.40 percent three months prior, while AgBank’s net interest margin narrowed to 2.31 percent at end-June, from 2.66 percent at the end of last year.

    BoCom’s nonperforming loans ((NPL)) stood at 1.54 percent at the end of June, unchanged since the end of March, while CCB’s NPL ratio increased to 1.63 percent as of the end of June, the same as end-March. AgBank’s NPL ratio rose only slightly to 2.4 percent by end-June from 2.39 percent at end-March, as the volume of NPLs climbed 6 percent to 225.4 billion yuan. (SD-Agencies)