Industrial & Commercial Bank of China has announced that its net profit for the first half of the year has increased by 1.2% compared to the same period last year. The bank reported a net profit of ¥170.11 billion ($23.36 billion) for the six months ending June 30, surpassing the ¥168.11 billion recorded in the previous year. However, this figure fell short of the estimated ¥176.55 billion forecasted by analysts.
Bond Investments Drive Profit Growth
An increase in gains from bond investments contributed significantly to the bank's positive financial performance during the first half of the year. Net trading income more than doubled from ¥4.635 billion to ¥9.87 billion, primarily due to the rise in bond investment income. Additionally, net gains on financial investments rose by an impressive 76% to ¥12.66 billion, largely attributed to the higher valuation of bonds and funds. Furthermore, income tax expenses decreased compared to the previous year.
Declining Interest Rates Impact Net Interest Income
However, despite these gains, net interest income experienced a decline of 3.9% from the previous year, reaching ¥336.99 billion. This decrease can be attributed to the falling loan interest rates witnessed in recent quarters in the country. Net fee and commission income also dropped by 3.4% to ¥73.465 billion.
Improved Asset Quality
Impairment losses on assets for the first half of the year decreased by 8.7% from the previous year, reaching ¥122.255 billion. The bank's non-performing loan ratio at the end of June stood at 1.36%, compared to 1.38% at the end of December.
Overall, Industrial & Commercial Bank of China has demonstrated continued profitability, driven by gains from bond investments and improved asset quality. However, the decline in net interest income highlights the challenges posed by declining interest rates in the market.
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