BANK of Communications Co. (BoCom), the country’s fifth-largest listed bank by assets, Friday reported a rise in six-month profits as its bad debt ratio improved slightly.

The results underline the strength of the country’s largest banks that are seeing business rebound even as smaller lenders face a regulatory squeeze from the government’s crackdown on risk in the wider financial system.

The wider banking sector, however, could see their net interest margins (NIM) get a boost in the second half as the government pumps funds into the economy.

BoCom’s NIM, the difference between interest paid and earned — a key gauge of profitability for lenders — held at 1.41 percent at the end of June, versus 1.40 percent at the end of March.

Its nonperforming loans stood at 1.49 percent at the end of June, versus 1.50 percent at end-March.

BoCom’s net profit came in at 40.77 billion yuan (US$5.93 billion) for the six months ended June, up 4.61 percent from a year ago.

For the quarter ended June, BoCom earned 20.68 billion yuan, up 5.2 percent, in line with an average forecast of four analyst surveyed.

The country’s top four lenders, Industrial and Commercial Bank of China, China Construction Bank and Agricultural Bank of China and Bank of China, will report first-half results this week.

They are expected to post modestly higher profits and steady margins, although analysts fear an unrestrained, credit-fuelled growth could worsen a build-up in bad loans as the world’s No.2 economy cools. (SD-Agencies)