Bank of Communications (3328) H1 2024 earnings summary

Executive summary

• Net profit attributable to shareholders was RMB45.29 billion, down 1.63% year-over-year, with net operating income at RMB132.55 billion, down 3.46%.

• Net interest income rose 2.24% year-over-year to RMB84.23 billion, while net fee and commission income fell 14.56% to RMB21.00 billion.

• Total assets reached RMB14.18 trillion, up 0.84% from year-end 2023; loans and advances to customers grew 3.90% to RMB8.27 trillion; deposits rose 1.16% to RMB8.65 trillion.

• Non-performing loan (NPL) ratio improved to 1.32%, and provision coverage ratio increased to 204.82%.

• Interim cash dividend of RMB0.182 per share proposed, totaling RMB13.52 billion.

Financial highlights

• Net interest margin declined by 2 bps year-over-year to 1.29% due to lower loan yields and weak credit demand.

• Operating expenses decreased 1.14% year-over-year, with a cost-to-income ratio of 29.94%.

• Credit impairment losses dropped 9.15% to RMB33.02 billion.

• Capital adequacy ratio improved to 16.34%, with core tier-1 at 10.30%.

• Liquidity coverage ratio and net stable funding ratio both exceeded regulatory requirements.

Outlook and guidance

• Management expects continued steady economic momentum in China, but notes rising external uncertainties.

• Focus areas include maintaining credit growth, digital transformation, risk management, and supporting the real economy.

• Net interest margin expected to remain under pressure in the short term.