August 28, 2018 / 9:20 AM / 3 months ago

UPDATE 3-Three of China's Big Four banks post higher profits, bad loans steady

* AgBank, BoC and CCB H1 profits up from year ago

* Net interest margins widen or steady for all three

* Non-performing loan ratios hold steady (Recasts, adds CCB results)

By Shu Zhang and Engen Tham

BEIJING, Aug 28 (Reuters) - Three of China’s biggest four state-owned lenders reported higher profits for the first half of the year, as bad loan ratios held steady.

China Construction Bank Corp (CCB), Agricultural Bank of China Ltd (AgBank) and Bank of China Ltd (BoC) also posted steady or wider net interest margins over the same period.

The stronger earnings come at a time when China is pumping funds into the banking system and rolling out support measures for local businesses to cushion the impact from an escalating trade war with the United States.

Net profit for AgBank, the first of the so-called Big Four Chinese state lenders to report interim results, rose 7 percent from a year ago to 115.8 billion yuan ($16.85 billion) for the six months ended June. BoC posted a 5 percent rise in profit to 109.1 billion yuan, while CCB netted a 6 percent rise, raking in 147.0 billion yuan.

Results for AgBank and BoC were underpinned by higher net interest margins (NIM), the difference between interest paid and earned - a key gauge of profitability for lenders.

AgBank’s NIM rose to 2.35 percent by the end of June from 2.28 percent at the end of December, while BoC’s NIM rose to 1.88 percent at the end of June from 1.85 percent at the end of March. AgBank did not disclose its NIM at the end of March.

CCB’s NIM, on the other hand, dipped to 2.34 percent at the end of June from 2.35 percent at the end of March.

The three lenders also posted steady non-performing loan (NPL) ratios, in stark contrast with the broader banking sector, as their diverse revenue sources and strong capital buffers gave them an edge over smaller peers which have been hit hard by a government crackdown on risk.

AgBank’s NPL ratio fell to 1.62 percent by the end of June from 1.68 percent at the end of March, while it remained unchanged for BoC from the end of March at 1.43 percent. CCB’s was 1.48 at the end of June, versus 1.49 percent at the end of March.

At the end of June, the NPL ratio for the wider banking sector was 1.86 percent, data from the China Banking and Insurance Regulatory Commission shows. This was the highest since 2009.

Analysts fear unrestrained, credit-fuelled growth, could stoke a further build-up in bad loans as the world’s No.2 economy cools, undermining Beijing’s push to reduce riskier lending and a mountain of debt.

In Shanghai, AgBank shares edged down 0.55 percent, BoC shares rose 0.28 percent and CCB’s climbed 0.58 percent. The Shanghai Shenzhen CSI 300 index closed down 0.19 percent.

$1 = 6.8740 Chinese yuan Additional reporting by Sumeet Chatterjee in Hong Kong; Editing by Himani Sarkar and Mark Potter

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