According to the National Financial Regulatory Administration, despite a slowdown in profit growth during the first quarter, China’s commercial banks possess the necessary capability to prevent and mitigate risks effectively. During this period, the net profit of these banks amounted to 667.9 billion yuan ($95.17 billion), indicating a year-on-year increase of 1.3 percent. However, this growth rate was 6.1 percentage points lower than the corresponding period last year, as reported by the administration.
The average return on capital for the first three months of the year was 10.32 percent, while the average return on assets stood at 0.81 percent, according to the NFRA. Nevertheless, it is important to note that by the end of the first quarter, the commercial banks’ loan loss reserves had risen by 257.2 billion yuan, reaching a total of 6.4 trillion yuan compared to the end of 2022.
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The provision coverage ratio, which measures loan loss reserves against bad loans, exceeded 205.24 percent, reflecting a 0.6 percentage point decrease compared to the end of 2022. Furthermore, the loan provision ratio, which assesses loan loss reserves against outstanding loans, was 3.32 percent, experiencing a decrease of 0.04 percentage points.
The NFRA revealed that China’s financial institutions experienced a substantial 10.9 percent year-on-year increase in assets, reaching 397.3 trillion yuan by the end of the first quarter. Major commercial banks accounted for 41.9 percent of this total, with their assets expanding by 14 percent to 166.4 trillion yuan on an annual basis. Joint-stock commercial banks also witnessed a rise of 7.5 percent in assets from the previous year, totaling 68.9 trillion yuan and constituting 17.3 percent of the national total.