Profits at China’s 5 Biggest Banks Jump as Much as 11% in Third Quarter
Key Facts
China’s five largest state-owned banks recorded year-on-year third-quarter profit growth ranging from 6% to 11%, their fastest quarterly pace since 2021 or 2022, depending on the bank, Reuters reported. Results were supported by stable net interest margins and improved asset quality, as a slowing economy and weak credit demand continued to weigh. Reuters said the results reflected improved profitability at the biggest lenders but did not prove a sector-wide rally in bank shares. Industrial and Commercial Bank of China, the world’s largest lender by assets, reported a 10% year-on-year increase in net profit on Friday. Results varied across the banks, with most posting double-digit growth while Bank of China’s growth was slower.
Agricultural Bank of China’s net profit rose 10.8%, China Construction Bank’s increased 9.8% and Bank of Communications’ climbed 10.1% year on year. Bank of China recorded growth of 6.4%, below its major peers, amid trade tensions and currency fluctuations, Reuters reported. The figures show differing profit growth rates among the five institutions, although all benefited from improvements in some funding conditions. The agency said each bank posted its fastest quarterly profit growth since 2021 or 2022, according to its own comparison. It also said the five banks kept nonperforming loan ratios broadly stable while stepping up the disposal of bad debt. But pressure on retail asset quality may persist.
Reuters attributed part of the profit growth to the repricing of higher-cost deposits, a process that began early in the year and whose impact faded in the second half. Monetary easing and mortgage interest subsidies helped lower funding costs and support margins. A Fitch analyst said, "The early recovery in net interest margins, along with broadly stable credit costs, positions these banks for a faster profitability recovery than smaller banks in the sector." But weak credit demand and a slowing economy continued to weigh on the biggest lenders. After targeted monetary support was stepped up in September, credit demand improved modestly, but analysts said the measures were unlikely to drive a substantial recovery in lending or mortgage growth.
Bond gains also supported quarterly profits, with analysts saying they remained a key driver of results at the major banks, whose portfolios include long-term bonds. Reuters quoted an ANZ analyst as saying, "Bond gains remained a key driver of major banks' profits in the quarter," while warning that this support could fade if bond yields fall. Impairment charges rose as revenue recovered, after banks increased loan-loss provisions. A decline in share prices in the fourth quarter also heightened volatility in fair-value gains that had been supported by rallies in initial public offering shares in the chip sector. China Construction Bank’s management said the economy had remained broadly stable but still faced "difficulties and challenges such as strong supply and weak demand."
Asset-quality risks remain despite stable nonperforming loan ratios. A Moody’s analyst warned that lending to technology and innovation sectors remained high, and asset risks could emerge gradually because companies in these sectors had not experienced a full business cycle. In the broader economy, the RatingDog manufacturing index rose to 52.0 points in October from 52.1 in September, beating the Reuters poll forecast of 51.6 points, but export order growth slowed. By contrast, China’s official manufacturing purchasing managers’ index contracted to 49.3 points in October, compared with 50.1 in September and 49.8 in August. The divergent readings place the banks’ results in an economy where manufacturing and demand signals remain mixed.
Traders are awaiting the Caixin services purchasing managers’ index on Wednesday, November 4, 2026, according to the FX Blue calendar. The date refers to the index published by Caixin, not a general services indicator, and no forecast was listed on the open calendar page. The release comes after the gap widened between October’s private and official manufacturing readings. Credit demand, funding costs and asset quality also remain central to assessing whether banks’ profit improvement can continue. Available coverage did not provide evidence of a unified move in bank shares following the results announcement.