China Minsheng Bank's net profit rises nearly 3.2 percent in first half

China Minsheng Banking Corp Ltd's net profit grew 3.18 percent year on year during the first six months of this year despite a drop in revenue, according to its interim earnings report yesterday.

The bank earned a net profit of 28.1 billion yuan (US$4.2 billion) in the first half of 2017, although its operating income fell 9.5 percent. It attributed the gain to the bank’s cost reduction efforts and its improved income structure.

Benefiting from the country’s tax reform, China's first private bank’s operating expenses declined sharply by 14.6 per cent to 3.13 billion yuan from the same period a year before, according to the report. The bank's impairment losses on assets dropped 17.5 percentage points to 3.6 billion yuan, which contributed significantly to the bank’s cost savings.

The bank's net non-interest income came to 29.4 billion yuan during the first half year, accounting for nearly 42 per cent of the 70.5 billion yuan revenue which, however, fell 9.51 percent annually.

The bank implemented the Phoenix Project, one of several proactive measures, which helped it reduce its balance sheet in the first two quarters, with its total assets and liabilities shrinking to 5.76 trillion yuan and 5.39 trillion yuan respectively. The bank's interbank assets were also substantially squeezed by 33 percent to 307.4 billion yuan.

As of the end of June, the group’s outstanding bad loans totaled 45.6 billion yuan, up 4.17 billion yuan from the end of last year, and the non-performing loan ratio added 0.01 percentage point from the end of 2016 to 1.60 per cent.

Minsheng Bank’s interim performance was “in line with the market’s expectations”, BOCOM International said in a note, but it warned that "the asset quality will continue to weigh on the bank’s outlook”.