(Yicai) Oct. 31 -- China's six biggest state-owned banks, which include Industrial and Commercial Bank of China and Agricultural Bank of China, grew nine-month earnings after a dip in the first half, while shrinking net interest margins continue to weigh on profitability.

ICBC, AgBank, Bank of China, China Construction Bank, Bank of Communications and Postal Savings Bank of China reported a 1.22 percent increase in combined net profit to CNY1.72 trillion (USD241.8 billion) for the nine months ended Sept. 30 from a year ago, based on data from their quarterly reports. Operating revenue rose 1.87 percent to CNY2.73 trillion (USD384 billion).

First-half profit fell 0.13 percent to CNY682.5 billion (USD96 billion), while revenue climbed 1.6 percent. In that period, all six banks reported higher revenues, but profits were split evenly with three banks logging gains and three posting declines.

Bank of China and ICBC led nine-month revenue growth with increases of 2.69 percent and 2.17 percent, respectively. AgBank led profit gains again with a 3.03 percent increase.

Most are making less money from lending because the gap between what they earn and what they pay in interest has narrowed. Only Bank of Communications logged an uptick in net interest income in the first three quarters, climbing 1.46 percent. The others all reported declines, with CCB and Bank of China seeing drops of over 3 percent.

Looking at net interest margins, Bank of China’s stayed steady at 1.26 percent from the middle of the year, while the others’ shrank. However, the declines are narrowing. Margins only tumbled by at most 0.04 percentage point from quarter to quarter, compared with drops of as much as 0.17 point in the first six months.

Asset quality continues to improve overall. Except for PSB, whose non-performing loan ratio edged up by 0.04 point in the nine months, the others saw a slight decrease in their bad loan ratios compared with the end of last year.

Provision coverage ratios, a measure of how much banks have set aside to cover dud loans, showed a mixed picture, with ICBC, CCB and Bocom logging slight increases, while the other three had varying declines.

PSB’s coverage ratio has fallen to around 240 percent from 286 percent at the end of last year. AgBank had the highest at 295.08 percent as of Sept. 30, down from 299.61 percent at the start of the year.

Editor: Kim Taylor