Profits at China’s four-biggest banks were further squeezed in the third quarter, as shrinking interest margins and rising bad loans took their toll on the once high-flying sector.
The lacklustre reporting season is a sharp reversal for the banks, led by Industrial and Commercial Bank of China, which in 2012 ballooned to eclipse global peers in terms of assets. That prompted then-premier Wen Jiabao to comment that the banks “make profits far too easily”.
Third-quarter earnings data released last week are the latest sign that the era of easy profits is ending as China’s economy slows and interest rates are deregulated. Net profit at Bank of China, the country's fourth-largest lender, fell in the third quarter for the first time on record, while profit was flat at China Construction Bank, the second largest.