China’s major banks reported their biggest profit drops in more than a decade
, as the economic impact ofChina’s top four banks, which account for more than one-third of the industry’s total assets, all said net profit fell more than 10% year-over-year in the first half, according to stock-exchange filings on Sunday.
The declines were in line with market expectations. Beijing has told state banks to sacrifice earnings for the benefit of the wider economy and to beef up rainy-day funds, since the emergence of bad debt normally lags behind an economic slump. Chen Shujin, an analyst at Jefferies, said higher provisions were the biggest reason for slimmer profits, which could suppress earnings as other parts of the economy suffered.
“A key message the regulator wants to deliver is that banks are supporting the real economy and banks’ performance should be in line with or slower than economic growth,” said Ms. Chen.
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