HONG KONG (AP) — Two of China's major state-owned banks posted higher half-year profits Thursday even as the world's No. 2 economy slows and authorities seek to cool a credit boom.
Industrial & Commercial Bank of China, the country's biggest state-owned lender and one of the world's biggest banks, said that January-June profit rose 12.4 percent to 138.5 billion yuan ($22.6 billion). Bank of China said its profit grew nearly 13 percent to 80.7 billion yuan ($13 billion).
Both banks posted higher earnings from loans and fees in the first half of the year compared with the same period in 2012.
ICBC said net interest income climbed 11 percent to 137.3 billion yuan while fee and commission income rose by a third to 45.5 billion yuan.
Bank of China said net interest income rose 11 percent to 137.3 billion yuan while fees and commissions rose by a third to 45.5 billion yuan. Controls on deposit and lending rates have traditionally guaranteed bumper profits for state-owned banks. But the recent axing of controls on lending rates might reduce their interest margins. Deposit rates remain regulated.
The banks posted higher profits despite China's economy undergoing a painful slowdown that could reduce loan demand and trigger defaults.
Banks' future profitability is also threatened by a government crackdown on lending aimed at curbing risky off-balance sheet lending.
ICBC showed some slight signs of deterioration, as its non-performing loan ratio edged up to 0.87 percent from 0.85 percent the year before.
ICBC said the sluggish global economy and depressed export markets made it harder for some Chinese businesses to pay back corporate loans while some people faced difficulty repaying personal loans because their incomes fell.