China's Commercial Banks Pull in 2.18% Net Interest Margin in Second Quarter
Chen Hongjie
/SOURCE : yicai
China's Commercial Banks Pull in 2.18% Net Interest Margin in Second Quarter

(Yicai Global) Aug. 14 -- Commercial banks in China earned a net interest margin of 2.18 percent in the second quarter of this year, up one basis point on the quarter thanks to a slight increase in lending rates and dispelling early 2019 forecasts that the figure would decline.

Rural commercial banks logged the highest net interest margin, up two basis points to 2.72 percent from the previous quarter, according to Yicai Global data. That of large state-owned banks slipped one basis point to 2.11 percent, while national joint-stock banks and urban commercial lenders registered 2.09 percent, up one and two basis points.

The average increase was largely due to an increase in interest rates, Golden Credit Rating's Chief Financial Analyst Xu Chengyuan told Yicai Global. Ample liquidity, reduced interbank borrowing costs and the fact that a large portion of debts were lent by and to private banks  also helped, he added.

The proportion of non-performing loans increased one basis point to 1.81 percent at commercial banks but fell at those in rural areas. State-owned and joint stock banks also pushed the figure down, but it surged 42 basis points at urban commercial banks to 2.3 percent, exceeding 2 percent for the first time since 2009.

The sharp rise in the non-performing rate at urban commercial banks was a result of authorities tightening the standards for what constitutes an NPL, Xu said, adding that enhanced supervision over off-balance sheet assets also exposed previously hidden risks at some regional banks.

Editor: Dou Shicong

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Keywords: Commercial banks , Net Interest Margin