BEIJING/SHANGHAI (Reuters) -China’s Bank of Communications Co Ltd (BoCom) on Friday reported a 4.5% rise in first-half net profit, but warned of challenges regarding SME and retail loan quality. China’s sixth-largest commercial bank by assets reported a net profit of 46.04 billion yuan ($6.32 billion), up from 44.05 billion a year earlier, a filing showed.
However, Chief Risk Officer Liu Jianjun warned that SME and retail loan asset quality would face challenges as COVID-era support is phased out.
Liu, speaking at a news conference held after the bank posted its first-half earnings, said loans to struggling developers Country Garden and Sino-Ocean only accounted for a small part of its business.
But added “liquidity in the real estate sector is tight… and will take time to recover.”
The bank said it will continue to increase financing available to serve the economy, focusing on areas such as boosting consumption and increasing China’s self-reliance in technology.
BoCom’s net interest margin – a key gauge of profitability – stood at 1.31% at the end of June, down from 1.33% at the end of March.
Its non-performing loan ratio was 1.35% at the end of the second quarter, up from 1.34% at end-March.
($1 = 7.2882 Chinese yuan renminbi)
(Reporting by Ziyi Tang and Engen Tham; editing by Edmund Klamann and Jason Neely)
