China’s biggest state-owned banks report higher first-half profits

China’s five largest state-owned banks reported first-half 2026 profit growth of 3% to 5%, as lower funding costs helped stabilize margins despite weak loan demand.

Bank of China led the group with a 5.1% increase in net profit. ICBC, China Construction Bank and Agricultural Bank of China also reported higher earnings, according to results released in late August.

The banks’ net interest margin improved by 1 basis point sequentially to 1.41% in the second quarter, the first quarterly increase in more than four years. The improvement came as expensive time deposits matured and were repriced at lower rates, reducing banks’ funding costs.

Profit growth was stronger at the largest lenders than across the commercial banking sector, where aggregate earnings were roughly flat or down about 0.6% on some measures. Smaller lenders including Bank of Ningbo and Bank of Chongqing reported first-half profit increases of 12.12% and 10.29%, respectively.

Bank asset quality remained broadly stable. Non-performing-loan ratios at major banks ranged from 1.08% to 1.15% as lenders used write-offs, restructuring and new provisions to manage problem exposures.

Credit demand remains soft, while earlier interest-rate cuts continue to pressure returns on new loans. The margin improvement will depend on whether lower deposit costs can offset weak lending and continued property-market stress.