HONG KONG–Two of China’s biggest state-owned banks reported their slowest profit growth in years amid an economic downturn and interest rate reforms.
Bank of China said Tuesday that profit grew 12 percent to 139.4 billion yuan (US$22.4 billion). Agricultural Bank of China’s earnings rose 19 percent to 145 billion yuan.
They were the slowest growth rates for either bank since they went public. Bank of China listed in 2006 while Agricultural Bank of China’s IPO was in 2010.
Profit growth slowed as the world’s second-largest economy underwent a painful slowdown in 2012.
Growth has also been hurt by the government’s easing of interest rate controls. Chinese banks have in the past benefited from a margin between lending and deposit rates of more than 3 percentage points, among the world’s largest.
China’s central bank in June cut the minimum rate banks are allowed to charge commercial borrowers to 0.8 times the government’s benchmark rate from the previous level of 0.9 percent. It also said banks would be allowed for the first time to pay depositors up to 1.1 times the state-set rate.
Bank of China said volatile global financial markets and low interest rate polices at central banks in other countries hurt returns in its foreign currency business.
Bank of China said net interest income rose 13 percent to 257 billion yuan. Agricultural Bank of China said it rose about 10 percent to 342 billion yuan.