The profit growth rate of the six major state-owned banks has seen marginal improvement, with the decline in net interest margins narrowing and the optimization of liability costs gradually taking effect. As the deployment of the "five major articles" progresses, focusing on key areas and increasing support efforts contribute to high-quality development, with the total amount of bank credit maintaining reasonable growth and structural optimization. At the same time, the policy orientation of preventing and resolving financial risks remains unchanged, which is favorable for the improvement of bank asset quality and risk expectations.

As of August 30, 2024, all the mid-term financial results of the 42 listed banks for the year 2024 have been disclosed, with the following four main characteristics:

First, net profit returns to positive growth, with high-quality regional banks still leading in performance. In the first half of 2024, the operating income of listed banks decreased by 1.95% year-on-year, while the net profit attributable to the parent company increased by 0.37% year-on-year. The performance of the major state-owned banks remained stable, with city commercial banks and rural commercial banks performing relatively well overall, and high-quality regional banks leading in performance.

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Second, the decline in net interest margins has narrowed, and the success of deposit cost reduction has been released. Affected by the downward trend in market interest rates, loan repricing, continued weak credit demand, and the continuation of deposit termization, the net interest income and net interest margins of listed banks are still under pressure. In the first half of 2024, the net interest income of listed banks decreased by 3.43% year-on-year; the net interest margin was 1.64%, a decrease of 14 basis points from the end of the previous year, but the decline has narrowed. The yield on interest-earning assets and the cost rate of interest-bearing liabilities were 3.78% and 2.21%, respectively, and the loan yield and deposit cost rate were 4.32% and 2.08%, respectively.

Third, investment income is eye-catching, and the pressure on intermediate business income continues to drag down non-interest income. Benefiting from the upward trend in the bond market, the investment income of listed banks performed well overall, driving the growth of other non-interest income, while the intermediate business income is still under pressure, dragging down non-interest income. In the first half of 2024, the non-interest income of listed banks increased by 2.03% year-on-year, the intermediate business income decreased by 12.03% year-on-year, and other non-interest income increased by 20.31% year-on-year.

Fourth, the overall asset quality is stable, with a slight increase in the proportion of loans under special mention, and the risk compensation and capital levels are sufficient. As of June 2024, the non-performing loan ratio of listed banks was 1.17%, unchanged from the first quarter and the end of the previous year; the provision coverage ratio was 304.7%, a decrease of 1.63 percentage points quarter-on-quarter.

According to the central bank's financial institution loan allocation statistical report for the second quarter of 2024, the following two factors are worth noting for the banking industry:

First, the pattern of weak credit demand continues, and the scale orientation is weakened.

Second, as the "five major articles" take effect, the structure of credit allocation is optimized.

The growth rate of net profit margin is improving.In the first half of the year, in terms of the performance of the six major state-owned banks, revenue decreased by 3% year-on-year, with the scale dragging down the decline; net profit decreased by 1% year-on-year, with provisions contributing to marginal improvement.

Looking at the revenue situation, the six major state-owned banks decreased by 3% year-on-year, with the slowdown in scale leading to a wider decline. It is worth mentioning that the Agricultural Bank of China (ABC) achieved positive growth in revenue and profit.

In the first half of the year, the overall revenue of the six major state-owned banks decreased by 3% year-on-year (down 2.5% year-on-year in the first quarter), maintaining negative growth, with the decline widening. In terms of the absolute contribution to revenue, the scale factor still supports strongly. The revenue growth rates from high to low are as follows: Agricultural Bank (0.2%), Postal Savings Bank (PSBC) (-0.1%), Bank of China (BOC) (-2.5%), China Construction Bank (CCB) (-3.4%), Bank of Communications (BOCOM) (-4.6%), and Industrial and Commercial Bank of China (ICBC) (-6.2%). The Agricultural Bank's revenue turned positive from negative, showing a more prominent performance.

Looking at the trend of year-on-year changes in revenue growth rates, the six major state-owned banks in the first half of the year decreased by 0.5 percentage points compared to the first quarter. The credit growth slowed down in the second quarter, and the positive contribution of scale growth decreased significantly, dragging down revenue further into negative growth. However, the interest spread stabilized in the second quarter, the negative contribution narrowed, and the marginal contribution of other non-interest income also increased, offsetting some of the impact of the scale decline. The year-on-year changes in growth rates from high to low are as follows: Agricultural Bank (2.1%), BOC (1.3%), CCB (-0.4%), PSBC (-1.5%), ICBC (-2.4%), and BOCOM (-4.3%). The Agricultural Bank and BOC achieved marginal improvement in year-on-year growth rates.

In terms of net profit, in the first half of the year, the six major state-owned banks decreased by 1% year-on-year, mainly due to the marginal improvement in provisions. The Agricultural Bank is the only state-owned bank that achieved positive growth in net profit.

Looking at the cumulative year-on-year growth rate of net profit in the first half of the year, the six major state-owned banks overall decreased by 1% year-on-year (down 2% year-on-year in the first quarter), with the decline narrowing marginally. Except for the Agricultural Bank, which turned from negative to positive growth, the net profit attributable to the parent company of the other five banks all showed negative growth, with the remaining five banks' growth rates ranging from -2% to -1%. The net profit growth rates from high to low are as follows: Agricultural Bank (2%), BOC (-1.2%), PSBC (-1.5%), BOCOM (-1.6%), CCB (-1.8%), and ICBC (-1.9%).

Looking at the trend of year-on-year changes in net profit growth rates, the six major state-owned banks in the first half of the year increased by 1.1 percentage points compared to the first quarter, mainly due to the contribution of provisions. The year-on-year changes in growth rates from high to low are as follows: Agricultural Bank (3.6%), BOC (1.7%), ICBC (0.9%), CCB (0.4%), PSBC (-0.2%), and BOCOM (-3.1%). BOCOM's growth rate decreased marginally by 3.1 percentage points, PSBC slightly declined, and the other banks all achieved marginal growth rate increases.

Breaking down the revenue side, the net interest income of the six major state-owned banks in the first half of the year decreased by 3% year-on-year, and net non-interest income decreased by 2.9% year-on-year; looking solely at net interest income, it decreased by 3% year-on-year, with a marginal decline of 1.1%, mainly due to the scale drag.

The net interest income of the six major state-owned banks in the first half of the year decreased by 3% year-on-year, with the growth rate of interest-earning assets at 7.9%, down 3.1% compared to the first quarter, a significant decrease; the net interest margin was 1.46%, down 2 basis points compared to the first quarter, with the decline narrowing. The growth rates of net interest income from high to low are as follows: BOCOM (2.2%), PSBC (1.8%), Agricultural Bank (0.1%), BOC (-3.1%), CCB (-5.2%), and ICBC (-6.8%), among which BOCOM, PSBC, and Agricultural Bank maintained positive growth, with Agricultural Bank, BOC, and BOCOM achieving marginal slight improvement in growth rates.

Looking at the marginal changes in year-on-year growth rates of net interest income, the six major state-owned banks in the first half of the year decreased by 1.1 percentage points compared to the first quarter, with the net interest margin's year-on-year decline remaining at 21 basis points; the growth rate of interest-earning assets decreased by 3.1 percentage points compared to the first quarter, and the slowdown in asset scale expansion is the main reason for the further decline in the growth rate of net interest income.Breaking down the net interest margin reveals that the annualized net interest margin of the six major state-owned banks decreased by 21 basis points (BP) to 1.46% in the first half of the year. The decline in the interest margin from low to high was as follows: Bank of Communications (6BP), Postal Savings Bank of China (16BP), China Construction Bank (18BP), Bank of China (24BP), Agricultural Bank of China (24BP), and Industrial and Commercial Bank of China (27BP).

Looking at the trend of the net interest margin decline, the six major state-owned banks maintained a decline of -21BP in the first half of the year, with the following banks showing a marginal narrowing of the decline compared to the first quarter: Agricultural Bank of China (4BP), Bank of China (3BP), and Bank of Communications (1BP).

In the first half of the year, the return on interest-earning assets of the six major state-owned banks decreased by 20BP year-on-year (a decrease of 17BP in the first quarter), with a marginal increase in the decline of 3BP. All six banks experienced a decrease, with the decline ranging from the lowest to the highest as follows: Bank of China (-13BP), China Construction Bank (-20BP), Bank of Communications (-21BP), Postal Savings Bank of China (-21BP), Agricultural Bank of China (-21BP), and Industrial and Commercial Bank of China (-25BP).

However, the interest-bearing liability cost rate of the six major state-owned banks remained stable year-on-year in the first half of the year (an increase of 5BP year-on-year in the first quarter), with the cost on the liability side transitioning from an increase to stability. The banks that achieved a decrease in liability costs year-on-year were Bank of Communications (-14BP), Postal Savings Bank of China (-5BP), and Agricultural Bank of China (-1BP).

In terms of net non-interest income, the six major state-owned banks saw a year-on-year decrease of 2.9% in the first half of the year, with the decline narrowing, mainly driven by a significant increase in other non-interest income.

The overall non-interest income of the six major state-owned banks decreased by 2.9% year-on-year in the second quarter, with the decline narrowing by 1.5% compared to the first quarter. Among them, the decline in fee income widened; other non-interest income grew by 15.8%, with a marginal increase in growth rate, which was the main support for the narrowing of the negative increase in non-interest income. The overall proportion of net non-interest income to revenue for the six banks decreased by 1.6 percentage points to 21.8%, with the growth rate ranging from highest to lowest as follows: China Construction Bank (3.7%), Agricultural Bank of China (0.6%), Bank of China (-0.3%), Industrial and Commercial Bank of China (-4.1%), Postal Savings Bank of China (-7.5%), and Bank of Communications (-16.9%).

Regarding net fee income, affected by fluctuations in the capital market and policies of reducing fees and concessions, the net fee income of the six major state-owned banks decreased by 9.9% in the first half of the year, with the decline widening by 2.4 percentage points compared to the first quarter. The proportion of fees to revenue decreased by 2.5 percentage points quarter-on-quarter to 14.8%, with Postal Savings Bank of China, Bank of Communications, and China Construction Bank showing the largest declines, while Agricultural Bank of China showed a marginal narrowing of the decline.

In terms of net other non-interest income, the six major state-owned banks saw a year-on-year increase of 15.8%, with the growth rate widening by 10.4 percentage points compared to the first quarter. The proportion of net other non-interest income to revenue increased by 0.9 percentage points quarter-on-quarter to 7.1%, which was the main driver for the narrowing of the negative increase in non-interest income.

The decline in liability costs widened quarter-on-quarter. By breaking down the assets and liabilities, it can be seen that the pricing on the asset side of the six major state-owned banks decreased by 10BP quarter-on-quarter, while the cost on the liability side decreased by 6BP quarter-on-quarter.In the second quarter, the net interest income of the six major state-owned banks turned negative, decreasing by 1.2% quarter-on-quarter, while their asset scale increased by 0.1% quarter-on-quarter, with the growth rate falling by 4.4% compared to the first quarter. The net interest margin was 1.43%, a decrease of 5 basis points (BP) quarter-on-quarter. In the single quarter of the second quarter, the net interest income of ICBC, CCB, and Postal Savings Bank saw negative growth, while ABC, BOC, and BOCOM experienced positive growth. The increase in interest-earning assets was only 0.1%, a relatively small increase, and the net interest margin continued to decline quarter-on-quarter.

Breaking down the net interest margin, it can be seen that the yield on the asset side continued to decrease quarter-on-quarter, while the cost on the liability side decreased by 6BP, a larger drop than in the first quarter, which enhanced the support for the interest margin. In the first half of the year, the net interest margin of the six major state-owned banks continued to decrease by 5BP quarter-on-quarter. Except for BOCOM, which saw an increase of 3BP quarter-on-quarter, the other banks saw a quarter-on-quarter decrease ranging from the lowest to the highest as follows: BOC (-1BP), ABC (-2BP), Postal Savings Bank (-4BP), CCB (-7BP), and ICBC (-11BP). Among them, the overall yield on interest-earning assets of the six major state-owned banks decreased by 10BP quarter-on-quarter, and the cost of funds on the liability side decreased by 6BP quarter-on-quarter, with both declines being larger than in the first quarter.

Breaking down the yield on the asset side, it is evident that asset structure and pricing are the common factors dragging down the yield. In terms of credit, the proportion of corporate and personal loans decreased. In the first half of the year, the yield on interest-earning assets of the six major state-owned banks decreased by 10BP quarter-on-quarter, with the decrease ranging from the lowest to the highest as follows: BOCOM (-5BP), Postal Savings Bank (-6BP), BOC (-9BP), CCB (-10BP), ABC (-11BP), and ICBC (-12BP).

From a structural perspective, the proportion of loans in assets increased quarter-on-quarter, but the proportion of corporate and retail loans in loans both decreased quarter-on-quarter compared to the first quarter, while the proportion of bills increased. Looking at the asset structure, the proportion of loans in interest-earning assets increased by 0.9 percentage points quarter-on-quarter to 60.2% in the second quarter, and the proportion of bond investments increased by 0.7 percentage points to 27.5%. Within the internal structure of loans, compared to the first quarter, the proportion of higher-yielding retail loans decreased by 0.8 percentage points, corporate loans decreased by 0.4 percentage points, while bills increased by 1.1 percentage points.

Among the six major state-owned banks, only BOCOM saw a slight increase of 0.4 percentage points in the proportion of personal loans for the half-year, while the proportion decreased for the other banks. Overall, the asset structure has had a certain drag on the interest margin.

From a pricing perspective, the impact of further price decreases cannot be ignored. According to the data disclosed in the central bank's second-quarter monetary policy report, the weighted average interest rate for newly issued loans in June was 3.68%, a decrease of 31BP from March; among them, the weighted average interest rate for general loans was 4.13%, a decrease of 14BP from March; the weighted average interest rate for corporate loans was 3.63%, a decrease of 10BP from March; and the weighted average interest rate for personal housing loans was 3.45%, a decrease of 24BP from March.

Breaking down the cost on the liability side, it can be seen that the decline in liability costs quarter-on-quarter has widened, enhancing the support for the interest margin, mainly due to the release of deposit interest rate cuts.

In the first half of the year, the cost of funds on the liability side for the six major state-owned banks decreased by 6BP quarter-on-quarter (a decrease of 4BP quarter-on-quarter in the first quarter), with the marginal decline quarter-on-quarter widening, and the decrease ranging from the highest to the lowest as follows: ABC (10BP), BOC (9BP), BOCOM (8BP), CCB (4BP), Postal Savings Bank (3BP), and ICBC (2BP).

The decline in liability costs was mainly due to interest rate factors: in terms of structure, the trend of deposit regularization continued. Looking at the liability structure, the proportion of deposits in interest-bearing liabilities decreased by 1.9 percentage points in the first half of the year, while interbank liabilities and bond issuances increased by 1.2 percentage points and 0.7 percentage points, respectively. Internally within deposits, the proportion of corporate demand deposits decreased by 1.2 percentage points, personal demand and corporate term deposits decreased by 0.2 percentage points and 0.3 percentage points, respectively, and personal term deposits increased by 1.7 percentage points, with the trend of deposit regularization continuing. In terms of pricing, the reduction in deposit interest rates further supported the decline in liability costs, with the cost of funds on the liability side decreasing by 6BP quarter-on-quarter (a decrease of 4BP quarter-on-quarter in the first quarter), and the marginal decline quarter-on-quarter widening.

The pressure from new non-performing assets is not significant.The asset quality of the six major state-owned banks remains robust overall, mainly reflected in a stable and slightly declining non-performing loan (NPL) ratio, a relatively small stock of legacy issues, a continued decline in the proportion of watch-list loans at a historical low, and a manageable pressure from new NPLs with ample provisions.

In absolute terms, the overall NPL ratio of the six major state-owned banks in the first half of the year was 1.28%, maintaining a quarterly decline of 1 basis point (BP), with the NPL ratio overall stable and slightly decreasing. The Postal Savings Bank had the lowest NPL ratio at only 0.83%, followed by Bank of China at 1.24%, with the other major banks not far behind, all around 1.34%. Looking at the trend of improvement, Industrial and Commercial Bank of China (ICBC), China Construction Bank (CCB), Agricultural Bank of China (ABC), and Postal Savings Bank improved by 1BP quarter-on-quarter, while Bank of China and Bank of Communications maintained stability, with the overall NPL ratio of the state-owned major banks remaining robust and continuously improving.

Although the net new NPLs of the six major state-owned banks increased slightly quarter-on-quarter, they are still at a relatively low level, with overall NPL generation pressure not high, and asset quality is expected to remain robust. In absolute terms, the cumulative annualized NPL generation rate of the six major banks in the first half of the year was 0.49%, with Postal Savings Bank being the lowest at 0.37%, and China Construction Bank and Agricultural Bank slightly higher, slightly exceeding 0.5%, while ICBC, Bank of Communications, and CCB were all around 0.48%, all at relatively low levels.

Looking at the trend, the cumulative annualized NPL generation rate of the six major state-owned banks increased by 2BP quarter-on-quarter, with Postal Savings Bank, Bank of Communications, ICBC, and CCB all improving quarter-on-quarter, with improvements of 20BP, 14BP, 3BP, and 2BP respectively, while Bank of China and Agricultural Bank increased by 3BP and 2BP respectively.

The proportion of watch-list loans of the six major state-owned banks in the first half of the year decreased by 5BP compared to the beginning of the year, and decreased by 1BP year-on-year, with limited future NPL pressure. In absolute terms, the overall proportion of watch-list loans of the six major banks decreased by 5BP to 1.66% compared to the beginning of the year, with Postal Savings Bank maintaining the lowest proportion of watch-list loans at 0.81%, followed by Agricultural Bank, Bank of China, and Bank of Communications at 1.42%, 1.43%, and 1.66% respectively, while ICBC and CCB were slightly higher at 1.92% and 2.07% respectively.

Looking at the trend, CCB and Bank of China improved by 37BP and 2BP respectively compared to the beginning of the year, especially CCB, although the absolute level of watch-list loans is high, it has been showing a steady trend of improvement every year since 2022; ICBC, Bank of Communications, and Postal Savings Bank increased by 7BP, 15BP, and 14BP respectively compared to the beginning of the year, with increases not significant.

From the overdue perspective, the overdue ratio has picked up slightly, but overall it remains at a low level. Data shows that in the first half of the year, the overdue ratio of the six major state-owned banks picked up slightly, with the overdue proportion of total loans at 1.23%, an increase of 9BP from the end of 2023, and an increase of 15BP from the first half of 2023, but overall it is still at a low level; among them, Agricultural Bank improved by 2BP to 1.27%, while ICBC and Bank of Communications increased by 6BP and 7BP to 1.34% and 1.45% respectively, CCB, Bank of China, and Postal Savings Bank increased by 15BP, 16BP, and 16BP to 1.27%, 1.21%, and 1.06% respectively.

From the perspective of NPL recognition, in the first half of the year, the overall NPL recognition of the six major state-owned banks was still relatively strict. In terms of the overdue proportion of NPLs, the overdue proportion of NPLs at the end of the first half of the year was 96.06%, an increase of 8.2 percentage points from the end of 2023, mainly due to the increase in overdue loans. The overall NPL recognition of the six major banks remained strict, with ICBC, Agricultural Bank, Bank of China, and CCB still below 100% in terms of overdue proportion of NPLs, with Agricultural Bank below 85%.

In terms of the overdue proportion of NPLs for more than 90 days, the overdue proportion of NPLs for more than 90 days for the six major banks was 63.53%, an increase of 7.2 percentage points from the beginning of the year, with Agricultural Bank being only 52.31%. Postal Savings Bank was slightly higher at 78.95%.

From the provision perspective, the provision coverage ratio of the six major state-owned banks increased by 1.9 percentage points quarter-on-quarter to 243.09% in the first half of the year, with a high overall safety margin and a continued加厚 of the safety cushion.In absolute terms, the provision coverage ratio of the six major banks all increased to above 200% in the second quarter, with a high safety margin that is further strengthening. Among them, Postal Savings Bank has the highest at 325.61%, followed by Agricultural Bank at 303.94%, and the other banks are all between 200% and 240%.

Looking at the trend, the provision coverage ratio of the six major banks continued to increase by 1.9% quarter-on-quarter, with all but Postal Savings Bank showing an increase, among which, Bank of Communications saw a significant improvement, increasing by 10.24% to 207.29% in a single quarter.

In the first half of the year, the loan-to-provision ratio of the six state-owned major banks increased by 1 basis point quarter-on-quarter to 3.12%. In absolute terms, the loan-to-provision ratio of the six major banks all exceeded 2.5%, with Agricultural Bank at 4% being the highest among the six, followed by China Construction Bank at 3.22%, and the other banks are all within the range of 2.5% to 3%. In terms of trend, Bank of Communications and Bank of China improved by 13 basis points and 2 basis points quarter-on-quarter to 2.73% and 2.5%, respectively, while the other major banks saw a slight decrease, overall remaining stable.

At present, there is still room for provisions to release profits, with both risk costs and credit costs experiencing a slight increase. As of the end of the first half of 2024, the credit cost of the six state-owned major banks was 0.71%, up by 11 basis points from the beginning of the year, with Agricultural Bank showing a larger increase of 18 basis points; the risk cost was 0.72%, up by 11 basis points from the beginning of the year, with Agricultural Bank and Industrial and Commercial Bank of China showing larger increases of 23 basis points and 15 basis points, respectively.

The sustainability of performance growth is guaranteed. In the first half of the year, the cost-to-income ratio of the six state-owned major banks decreased year-on-year, mainly reflected in the marginal decrease in expenditure, and the results of cost reduction and efficiency improvement were achieved.

The business and management expenses of the six major banks in the first half of the year increased by 0.3% year-on-year, with a quarter-on-quarter decrease of 1.4%, showing that the six major banks have achieved positive results in cost reduction and efficiency improvement, with a cost-to-income ratio of 29.8%, an increase of 1.8% quarter-on-quarter, mainly due to the扩大ed revenue decline in the second quarter.

In terms of management fees, in absolute terms, Postal Savings Bank maintained a high growth rate of 4.5%, followed by Agricultural Bank at 0.5%, and the other four major banks all achieved a year-on-year negative growth, among which, China Construction Bank and Bank of China both achieved a year-on-year negative growth of 1.6%. In terms of trend, except for Bank of Communications, the year-on-year growth rate of all banks continued to decrease compared to the first quarter, among which, Postal Savings Bank had the largest decrease, with a decrease of 3.2%.

In terms of the cost-to-income ratio, in absolute terms, the cost-to-income ratio of the four major banks of Industrial and Commercial Bank of China, Agricultural Bank, Bank of China, and China Construction Bank are all below 30%, among which, Industrial and Commercial Bank of China and China Construction Bank are below 25%; while Postal Savings Bank and Bank of Communications are higher, above 30%. In terms of trend, the cost-to-income ratio of all banks increased to varying degrees compared to the first quarter, mainly due to the denominator's revenue decline in the second quarter.

In terms of capital situation, the core tier-1 capital adequacy ratio of the six state-owned major banks slightly decreased, but still maintained a high level. In the first half of the year, the core tier-1 capital adequacy ratio of the six major banks slightly decreased by 9 basis points quarter-on-quarter to 12.31%, still maintaining a high level overall; among them, China Construction Bank was 14.01%, an increase of 86 basis points from the beginning of the year, with the absolute value and improvement margin being the highest.In terms of mid-term dividend distribution, all five major banks except Postal Savings have released their mid-term dividend plans. To maintain a unified standard, the dividend payout ratio is calculated based on the total cash dividend / net profit attributable to the parent company, with all five major banks having a dividend ratio of around 30%. Postal Savings Bank's mid-term report also clearly proposed a profit distribution plan for the mid-term profits of 2024, with a dividend ratio not exceeding 30%.

In terms of revenue, the growth rate of revenue for the six state-owned banks continued to decline. Among them, Agricultural Bank and Bank of China performed relatively well, with the decline in the second quarter slowing down, and Agricultural Bank even achieved a positive growth of 0.2%; in terms of net profit, the decline for the six banks narrowed overall, with Agricultural Bank achieving a positive growth of 2%, performing relatively well, and the declines for Industrial and Commercial Bank, Construction Bank, and Bank of China narrowed, while the declines for Bank of Communications and Postal Savings increased.

In terms of interest income, Agricultural Bank, Bank of Communications, and Postal Savings maintained positive growth year-on-year, and the scale growth rate of all six banks continued to decline, with Bank of China and Bank of Communications having relatively smaller declines; in terms of price, Bank of Communications had the smallest year-on-year decline in net interest margin, mainly due to good cost control on the liability side; in terms of non-interest income, Construction Bank and Agricultural Bank achieved positive growth, mainly supported by non-interest income.

In terms of asset quality, the asset quality of the six banks remained robust overall, with the non-performing loan ratio and the ratio of loans under special mention continuing to decline, and the provision coverage ratio continued to increase. Although the overdue and non-performing loan generation increased slightly, it remained at a low level; among them, Postal Savings had the lowest non-performing loan ratio, the proportion of loans under special mention, and the overdue rate, with the highest provision coverage ratio; Bank of Communications had the largest increase in provision coverage ratio and loan-to-deposit ratio quarter-on-quarter.

Due to the deceleration of scale, the revenue of the six state-owned banks in the first half of the year still faces certain pressure, but the profit growth rate has improved marginally; the robust asset quality, high provisions, and relatively sufficient capital of the six banks ensure the sustainability of their performance.

Collectively, the mid-term dividend returns to investors.

Overall, the revenue growth of the six state-owned banks in the first half of the year is under pressure, and other non-interest income has become the main support point for revenue growth. In the first half of the year, the year-on-year growth rates of revenue for Industrial and Commercial Bank, Agricultural Bank, Bank of China, Construction Bank, Bank of Communications, and Postal Savings were -6%, 0.3%, -0.7%, -3.6%, -3.5%, and -0.1%, respectively, with changes of -2.6 percentage points, 2.1 percentage points, 2.3 percentage points, -0.6 percentage points, -3.5 percentage points, and -1.5 percentage points compared to the first quarter.

Looking at the revenue breakdown, the growth rate of net interest income for Agricultural Bank and Bank of Communications is relatively resilient. In the first half of the year, the year-on-year growth rates of net interest income for Industrial and Commercial Bank, Agricultural Bank, Bank of China, Construction Bank, Bank of Communications, and Postal Savings were -6.8%, 0.1%, -3.1%, -5.2%, 2.2%, and 1.8%, respectively, with changes of -2.7 percentage points, 0.9 percentage points, 0.8 percentage points, -3 percentage points, 0.03 percentage points, and -1.3 percentage points compared to the first quarter. Under the overall trend of narrowing net interest margins, the scale expansion has limited effect on the growth of net interest income.

For the six state-owned banks, the income from intermediate businesses is generally under pressure. In the first half of the year, the year-on-year growth rates of intermediate business income for Industrial and Commercial Bank, Agricultural Bank, Bank of China, Construction Bank, Bank of Communications, and Postal Savings were -8.2%, -7.9%, -7.6%, -11.2%, -14.6%, and -16.7%, respectively, mainly due to the pressure on the growth of wealth management intermediate business income such as agency business under the background of capital market fluctuations and the implementation of the "unified reporting and payment" fee reduction policy.

Most banks have achieved positive growth in other non-interest income. In the first half of the year, the year-on-year growth rates of other non-interest income for Industrial and Commercial Bank, Agricultural Bank, Bank of China, Construction Bank, Bank of Communications, and Postal Savings were 5.7%, 18.9%, 22.2%, 55.8%, -10.2%, and 1.5%, respectively. Among them, the negative growth of Bank of Communications was mainly due to the high base in the same period of 2023, while the other non-interest income of the other five state-owned large banks generally benefited from the performance of the bond market in the first half of the year. Among them, the fair value change income of Industrial and Commercial Bank and Construction Bank increased significantly, and the investment income of Agricultural Bank, Bank of China, and Postal Savings increased.In terms of profit, only the Agricultural Bank achieved a positive growth in profits, with a significant reduction in impairment provisions for the corporate business segment. In the first half of the year, the year-on-year growth rates of net profit attributable to the parent company for ICBC, ABC, BOC, CCB, BOCOM, and Postal Savings were -1.9%, 2%, -1.2%, -1.8%, -1.6%, and -1.5%, respectively, with changes in growth rates compared to the first quarter of 0.9 percentage points, 3.6 percentage points, 1.7 percentage points, 0.4 percentage points, -3.1 percentage points, and -0.2 percentage points, respectively.

There are two main reasons for the pressure on profit growth: first, the drag on revenue growth, and second, the increase in the cost-to-income ratio of the six state-owned banks at the end of the first half of the year compared to the end of the first quarter. In addition, the phenomenon of provisions feeding back into profits is quite common. In the first half of the year, the asset impairment losses of the six state-owned banks were all negative year-on-year, mainly due to a significant decrease in asset impairment losses in the corporate business segment.

The slowdown in scale expansion continues, with new credit allocation still characterized by a strong corporate sector and a weaker retail sector. Under the guidance of policies that de-emphasize scale assessment and focus on quality and efficiency, the pace of balance sheet expansion of the six state-owned banks has slowed to varying degrees. In the first half of the year, the year-on-year growth rates of loan totals for ICBC, ABC, BOC, CCB, BOCOM, and Postal Savings were 10.1%, 11.9%, 9.8%, 10.0%, 6.1%, and 10.7%, respectively, with changes in growth rates compared to the first quarter of -1.5 percentage points, -1 percentage point, -2.6 percentage points, -1.2 percentage points, -0.7 percentage points, and -1.1 percentage points, respectively. In terms of the structure of credit increment, the contribution of corporate loans to the credit increment of the six state-owned banks in the first half of the year accounted for more than 60%, and the demand on the retail side still needs to be restored in the short term.

Deposit costs have improved, and the net interest margin of some banks has rebounded. In the first half of the year, the net interest margins of ICBC, ABC, BOC, CCB, BOCOM, and Postal Savings were 1.43%, 1.45%, 1.44%, 1.54%, 1.29%, and 1.91%, respectively. Compared with the first quarter, except for BOC, which was basically flat, the other five banks changed by -5BP, 1BP, 3BP, 2BP, and -1BP, respectively. In addition, the impact of measures such as lowering deposit挂牌 prices, prohibiting "manual interest supplementation," and reducing high-interest deposit products on the cost side is gradually becoming apparent. In the first half of the year, the deposit cost rates of ICBC, ABC, BOC, CCB, BOCOM, and Postal Savings changed by -6BP, -7BP, 2BP, -5BP, -14BP, and -6BP, respectively, compared to 2023.

The non-performing loan ratio remains stable or slightly decreases, and provisions remain at an ample level. As of the end of the first half of the year, the non-performing loan ratios of ICBC, ABC, BOC, CCB, BOCOM, and Postal Savings were 1.35%, 1.32%, 1.24%, 1.35%, 1.32%, and 0.84%, respectively. Among them, the non-performing loan ratios of ICBC and CCB decreased by 1BP and 1BP, respectively, compared to the end of the first quarter, while the non-performing loan ratios of the other state-owned banks remained the same as at the end of the first quarter.

It is worth noting that forward-looking indicators have fluctuated. As of the end of the first half of the year, the watch list ratio and overdue ratio of ICBC, BOCOM, and Postal Savings all increased compared to the end of 2023.

In terms of the provision coverage ratio, except for Postal Savings, the provision coverage ratios of the other five state-owned banks at the end of the first half of the year all increased compared to the end of the first quarter. Although the provision coverage ratio of Postal Savings decreased, its absolute value still ranks first among state-owned banks. As of the end of the first half of the year, the provision coverage ratios of ICBC, ABC, BOC, CCB, BOCOM, and Postal Savings were 208%, 304%, 202%, 239%, 205%, and 326%, respectively.