The PwC launched a report satiating the profitability of five large commercial banks appears to have peaked on Wednesday, while asset quality risk increasing.
In 2015, the combined profit growth of the five lenders (Industrial and Commercial Banks of China, China Construction Bank, Agricultural Bank of China, Bank of China, and Bank of Communications) was 933.63 billion yuan ($144.34 billion), a 0.69 percent year-on-year growth, down from 6.52 percent growth in 2014.
The 18 A-share and H-share lenders which have already disclosed annual results by April 18 were down from 7.39 percent to 1.91 percent at combined number of 1.21 trillion yuan.
"Due to the economic slowdown, listed banks have increased provisions. This has restricted the growth in their net profit", said Jimmy Leung, leader of the PwC China Banking and Capital Markets.
"The liberalization of interest rates, with the impact of rate cuts has led to slower growth in interest income, which also curbed profit growth," said Leung.
"Strengthening asset quality will be a long-term challenge, but developments such as Fintech offer some promise to the sector."
Market analysts said pilot securitization of commercial banks' non-performing assets measures need to follow market-driven rationale. This would enable lenders to choose whether they are willing to securitize particular non-performing assets, and have a say in pricing and risk management.
City commercial banks including Shengjing Bank, Huishang Bank, Harbin Bank, Bank of Chongqing, Bank of Jinzhou, Bank of Zhengzhou, and Bank of Qingdao reported relatively higher loan yields than their joint-stock banks and large banks peers.
