March 28, 2012
Translated by Zhu Na

According to their recently-released annual reports, China's five major state-owned banks achieved a combined net profit of 781 billion yuan last year (other Chinese media are putting the figure at 775 billion yuan), exceeding market forecasts of 750 billion yuan.

Analysts say that the strong profits are an indication that the state-owned banks can still flourish despite moves to liberalize China's interest rates and last year's slow down in the rate of economic growth.

China's "big five" banks are the Industrial and Commercial Bank of China (ICBC), the Bank of China (BOC), China Construction Bank (CCB), the Agricultural Bank of China (ABC) and the Bank of Communications (BOCOM)

Data released by the China Banking Regulatory Commission (CBRC) in 2012 revealed that the country's commercial banks made a combined net profit of 1.24 trillion yuan. This means that the net profit of the five major banks accounted for 63 percent of the whole industry's profits.

ICBC out performed the other four state-owned commercial banks, it achieved net profits of 238.7 billion yuan last year, an increase of 14.5 percent over 2011.

The Bank of Communications registered the lowest net profit with 58.4 billion yuan, only one fourth that of ICBC.

Interest returns remained the banks' main source of profit. ICBC showed the largest net interest income, which reached 417.8 billion yuan last year. Each of the five major banks' net interest income accounted for over 70 percent of their revenue.

The annual reports also revealed that five state-owned banks' net profit growth rate had significantly decreased. Aside from Bank of China, where profits grew by less than 20 percent for the past two years, the other four big banks saw the pace of profit growth drop to below 20 percent in 2012 from above 25 percent in 2011.

An industry insider said that this slow down in the pace of profit growth is a long-term trend.

The main reason that profit growth is slowing is that the slow down in the broader economy is reducing the aggregate financial requirments of business. In addition, further liberalization of the [benchmark] interest rates will lead to a narrowing of the banks' interest margin.

"Last year, bank regulatory authorities launched a series of regulatory measures, such as reining in the banks' arbitrary collection of bank fees, which greatly impacted banks' intermediary business. This is also one of the reasons that growth rates are slowing," said the industry insider.

Links and Sources
Beijing News: 五大行去年净利占银行业63%
China Securities Journal: 五大行去年净赚7746亿日赚逾20亿 股息率超定存