The year 2024 has begun with a promising outlook for China’s banking sector, as several publicly listed banks have started to release their performance reports for the yearAs of February 18, 16 banks have disclosed their preliminary earnings reports, revealing a sustained resilience in profits and solid asset quality across the industryThe overall economic climate remains robust, indicating that the banks are maneuvering through the challenges of the market with a strategic focus on early investment and early benefits, contributing to an encouraging start to the year with strong lending performance.

Among the banks, the data showcases an uplifting trend in their financial resultsRevenue and net profits have generally seen an increase, with Nanjing Bank leading the pack by posting an impressive year-on-year revenue growth of 11.32%, making it the only bank reported to achieve double-digit growth thus farOther major players like China Merchants Bank and Shanghai Pudong Development Bank, however, have witnessed declines in their revenue figuresNotably, the net profit of Shanghai Pudong Development Bank surged by 23.31%, marking it as one of the standout performers in terms of net profit growth, while Xiamen Bank faced challenges and reported a 2.62% decrease in net profit.

According to Xia Feifei, the chief analyst of the banking sector at CITIC Securities, the overall operational stability within these banks highlights a consistent profitability within the sector, despite some discrepancies among individual bank performancesHe noted that the 2024 weighted average growth rates for revenue and net profit stood at 2.3% and 5.5% respectively, indicating a notable improvement compared to the prior year’s figures.

Xia pointed out that variances between banks can still arise due to differences in regional economies, management practices, and resource allocationsAmong the listed banks, certain banks like Shanghai Pudong Bank and Qingdao Bank achieved net profit growth rates exceeding 20%. Other well-performing banks include Hangzhou Bank and Qilu Bank, with net profit growth at 18.07% and 17.78%, respectively

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Several other banks have also surpassed a 10% growth margin, indicating robust sector performance.

The analysis further suggests that this performance might reflect continued regional disparities and that such differences may persist as we move further into 2025. With this backdrop, the asset quality among the disclosed banks also appears stable, with many recording an improvement in non-performing loan ratios compared to the start of the yearAs of this reporting date, the average non-performing loan ratio across 15 banks has dipped slightly to 0.96%, marking a 3 basis point improvement.

Diving deeper into specific institutions, the non-performing loan ratios of Chengdu Bank, Xiamen Bank, Ningbo Bank, and Hangzhou Bank all remain commendably low, falling beneath the 1% markFurthermore, Shanghai Pudong Bank and Nanjing Bank have shown significant reductions in their non-performing loan ratios when compared to the previous year, enhancing their risk management credentials.

Despite the observable declines in the provision coverage ratio across several banks, the ratios remain at high levels, reassuring stakeholders of the banks' robust risk bearing capacitiesFive banks have maintained coverage ratios exceeding 400%, showcasing their strong preparedness against potential credit losses.

When it comes to asset growth, the financial reports reflect a steady increase in asset scales among these institutionsAlthough the overall asset growth for 2024 exhibited a slight deceleration compared to the previous year, the figures remain solid with an average year-on-year increase of 10.63%. City commercial banks have notably surged ahead in terms of asset scale growth, with Jiangsu Bank taking the lead at a remarkable growth of 16.12%.

The data reveals that, while the non-credit assets have propelled overall asset growth trends, loan growth rates have experienced a minor declineNevertheless, quality city commercial banks have maintained a robust demand for loans in healthy districts, contributing to their impressive asset performance.

Indeed, several banks have projected strong lending growth rates of over 10%, including Ningbo Bank at 17.83%, Jiangsu Bank at 16.28%, and Hangzhou Bank at 16.16%, among others

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