August 23, 2018 / 9:35 AM / 8 months ago

UPDATE 1-China's BoCom H1 net profit up, bad loans improve slightly

* H1 net profit 40.8 bln yuan vs 39 bln yuan a year-ago Net interest margin 1.41 pct at end-June vs 1.40 pct end-March NPL ratio 1.49 pct at end-June vs 1.50 pct end-March (Adds NIM, bad debt ratio, other details)

SHANGHAI, Aug 23 (Reuters) - China’s Bank of Communications Co Ltd , the country’s fifth-largest listed bank by assets, reported a rise in six-month profits as its bad debt ratio improved slightly.

The results underline the strength of the country’s largest banks that are seeing business rebound even as smaller lenders face a regulatory squeeze from Beijing’s crackdown on risk in the wider financial system.

The wider banking sector, however, could see their net interest margins (NIM) get a boost in the second half as the government pumps funds into the economy.

BoCom’s NIM, the difference between interest paid and earned - a key gauge of profitability for lenders, held at 1.41 percent at the end of June, versus 1.40 percent at the end of March.

Its non-performing loans stood at 1.49 percent at the end of June, versus 1.50 percent at end-March.

BoCom’s net profit came in at 40.77 billion yuan ($5.93 billion) for the six months ended June, up 4.61 percent from a year ago, a filing with the Hong Kong stock exchange shows.

For the quarter ended June, BoCom earned 20.68 billion yuan, up 5.2 percent, Reuters calculations show, in line with an average forecast of four analyst surveyed by Reuters.

The country’s top four lenders, Industrial and Commercial Bank of China, China Construction Bank and Agricultural Bank of China and Bank of China Ltd , will report first-half results next week.

They are expected to post modestly higher profits and steady margins, although analysts fear an unrestrained, credit-fuelled growth could worsen a build-up in bad loans as the world’s No.2 economy cools.

By the end of the June quarter, the non-performing loan ratio for the banking sector reached 1.86 percent, data from the China Insurance and Banking Regulatory Commission shows, the highest since 2009. ($1 = 6.8740 Chinese yuan) (Reporting by Engen Tham and Shu Zhang; Editing by Himani Sarkar)

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