Top China bank ICBC reports jump in property bad debt

Top China bank ICBC reports jump in property bad debt

BEIJING: Industrial and Commercial Bank of China (ICBC), the world’s largest commercial lender by assets, said soured lending to the real estate sector in the first half of this year rose 15 per cent.

The lender reported 38.8 billion yuan of non-performing loans (NPL) at the end of June, compared with 33.8 billion yuan at the end of last year, according to its first-half earnings report on Tuesday (Aug 30). 

This means that the NPL ratio for the real estate sector stood at 5.47 per cent, compared to an average for the bank of 1.41 per cent.

The lender is the third of China’s largest banks to report growing bad debt in the real estate sector, amid a gloomy first half in which rising developer defaults halted housing projects, leading to mortgage boycotts.

Despite this, ICBC’s net profit grew 4.9 per cent year on year in the first half of this year.

Profit was 171.5 billion yuan (US$24.82 billion) in the six months through June, compared with 163.47 billion yuan in the same period a year earlier, the bank said in a filing on Tuesday.

The data implies a second quarter net profit of 80.9 billion yuan, up 4 per cent from a year earlier, Reuters calculations show.

The bank said its net interest margin – a key indicator of bank profitability – was 2.03 per cent at the end of June compared to 2.10 per cent at the end of March.

It reported a 1.41 per cent non-performing loan ratio at the end of the second quarter compared with 1.42 per cent from the end of the previous quarter.