Three of China’s Big Five lenders post shrinking margins in Q1 By Reuters

BEIJING/SHANGHAI (Reuters) -Agricultural Bank of China Ltd (AgBank) and the country’s largest lender Industrial and Commercial Bank of China Ltd (ICBC) said on Monday margins shrank in the first quarter as lenders are under pressure to support troubled developers and boost weak loan demand.

AgBank reported its net interest margin (NIM) – a key gauge of profitability – shrank to 1.44% at the end of March from 1.6% at the end of last year, with ICBC’s NIM down to 1.48% at end-March from 1.61%.

This follows China’s Bank of Communications Co Ltd (BoCom) which also posted narrowing net interest margins on Friday.

Chinese banks are confronting shrinking profitability as Beijing has urged state lenders to expedite the approval of loans to cash-starved property developers, while loan demand remains weak.

AgBank recorded a 1.63% drop in net profit and ICBC a 2.78% decline in the first quarter, but BoCom bucked the trend with a 1.44% increase over the same period.

All three lenders posted flat or slightly improved non-performing loan ratios at the end of March from the end of December last year.

($1 = 7.2461 )