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People's Daily Online>>China Business

Interest income big contributor to major banks' profit

By Ouyang Jie, Tian Junrong, Zhu Juan, Xie Weiqun (People's Daily)

15:05, April 06, 2012

Edited and translated by People's Daily Online

Statistics showed that in 2011, the interest income accounted for nearly 77 percent of the operating income of China's five major state-owned banks, namely the Industrial and Commercial Bank of China, China Construction Bank, the Agricultural Bank of China, the Bank of China, and the Bank of Communications.

China's commercial banks posted a total net profit of over 1 trillion yuan in 2011, up 36 percent from the previous year. The net profit of the country's five major state-owned banks amounted to over 680.8 billion yuan, making up more than 60 percent of the industry's total net profit, according to their annual earnings reports.

Last year, net fee and commission income increased more than 30 percent in most Chinese banks, which greatly drove up their non-interest income.

Net interest income remains the primary revenue source of Chinese banks, although the banks have witnessed rapid growth in non-interest income such as intermediate business income in recent years.

Banks see steady profit growth thanks to growing interest income

The five major state-owned banks have become the main contributor to the industry's profit growth in 2011, according to their annual earnings reports and data from the China Banking Regulatory Commission (CBRC).

The steady growth in domestic banks' profits was mainly driven by a continuous increase in their net interest margin, which led to steady growth in net interest income and significant growth in non-interest income.

The banks' asset quality and provision coverage ratios have improved significantly, meaning that they now possess a greater ability to cope with risks.

Tight money conditions have bolstered domestic banks' bargaining power with borrowers, and led to a wider net interest margin.

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