China Construction Bank (OTC:CICHF) (SHA:601939) reported a year-on-year (YoY) increase of 2.63% in net profit for the third quarter, reaching CNY 88.11 billion ($12.04 billion), outperforming Visible Alpha analysts' projection of CNY 67.31 billion. This rise in profit was primarily driven by lower credit costs, despite a decrease in interest income due to lower market rates.
The bank's primary earnings source, net interest income, saw a decline of 5.6% YoY, totaling CNY 156.24 billion. Concurrently, net fee and commission income also experienced a slight decrease of 1.3%, amounting to CNY 24.31 billion.
However, the bank's bottom line was boosted by a 24% reduction in credit impairment losses, which fell to CNY 29.035 billion amid China's economic recovery from the pandemic-induced downturn. This financial stability was further indicated by the non-performing loan ratio, which recorded a minor drop from 1.38% to 1.37%.
In addition to these figures, CCB also reported an increase in gross loans and advances to customers by 12%, reaching a new high of CNY 23.659 trillion. Despite challenges such as China's deteriorating domestic demand and escalating property crisis, the bank reaffirmed its commitment to bolstering the real economy.
Notably, there was a slight dip in the bank's net interest margin—a crucial profitability metric—from 1.79% to 1.75%. However, this did not dampen the overall positive financial performance for the quarter.
CCB led the Q3 financial disclosures among China's top five banks with these results, demonstrating resilience and robustness in an uncertain economic climate.
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