MAJOR Chinese banks extended their earning recovery in the third quarter, fueled by rising credit demand and improving asset quality even as turmoil mounts in the nation’s sprawling real estate market.

Industrial and Commercial Bank of China (ICBC), the world’s largest bank, reported Friday a 10.6 percent rise in third-quarter net profit from a year earlier, while Bank of China Ltd. (BOC) said its profit climbed 13.2 percent. Smaller Bank of Communications Co. (BoCom) saw quarterly profit jump 37.9 percent and China Construction Bank Corp.’s (CCB) earnings rose 15.6 percent.

They followed solid results from Agricultural Bank of China Ltd. (AgBank) Thursday, with a 14 percent rise in quarterly profit.

The nonperforming loan ratios at all five lenders fell slightly or held steady at the end of the third quarter compared with the end of the previous three months.

After being enlisted to help millions of struggling business with cheap loans during the COVID-19 pandemic, China’s US$52 trillion banking industry staged a comeback along with the economy this year.

Overall, net interest margins, a key indicator of bank profitability, stabilized or slipped at the end of the third quarter from the second quarter.

Mortgage lending at BoCom increased slightly at the end of the third quarter from a year earlier, while the other four banks did not post a breakdown on loans. Some domestic media reports said that such lending increased and interest rates fell in some cities, an indicator of a marginal relaxation of control over credit to the sector.

Chinese banks had more than 51.4 trillion yuan (US$8.02 trillion) in outstanding loans to the real estate sector as of September, an increase of 7.6 percent from a year earlier. The exposure was more than any other industry and accounted for about 27 percent of the nation’s total lending, according to official data.

The financing models of Chinese developers depended on a constant stream of new sales and new fundraising to feed their operations.

They quickly ran into trouble when the government introduced its “three red lines” rules last year that capped the amount of debt developers could take on compared with the amount of cash, assets and equity capital they held.

(SD-Agencies)