TWO of China’s largest lenders each reported an over 60 percent rise in net profit for the fourth quarter of 2020 yesterday as margins inched wider.

This follows the results logged by three of the country’s other biggest banks, which also reported profit growth and steady net interest margins, a key gauge of profitability.

Bank of China (BOC), the country’s fourth-largest bank by assets, reported a 69.5 percent rise in net profit for the fourth quarter of 2020, while Agricultural Bank of China Ltd. (AgBank) posted a 61 percent rise over the same period.

During the first three quarters of 2020, Chinese lenders made hefty loan-loss provisions as the government urged the sector to step up lending to pandemic-hit sectors, but many have begun to turn a corner in earnings in tandem with an economic recovery and are expected to continue to do so throughout the year.

Analysts predict a positive turn in net interest margin for big banks this year because of the central bank’s gradual return to a neutral monetary policy stance.

For BOC, the most international of China’s large banks in terms of global franchise, net interest margin improved slightly to 1.85 percent from 1.81 percent three months earlier.

AgBank followed suit with a net interest margin of 2.2 percent at the end of December from 2.14 percent at the end of June. The lender does not release net interest margin every quarter.

However, despite the rosy forecasts, margins are still under pressure for some this year.

“The bank is still facing certain pressure on net interest margin in 2021, in the first quarter of 2021, the re-pricing of mortgage loans has dragged net interest margin lower by 2-3 basis points,” said AgBank president Zhang Qingsong.

Meanwhile, nonperforming loan ratios also held roughly steady for the two lenders.

At BOC, nonperforming loan ratio inched lower to 1.46 percent at the end of December from 1.48 percent at the end of September.

AgBank’s nonperforming loan ratio rose slightly to 1.57 percent from 1.52 percent over the same period.

(SD-Agencies)