Chinas largest banks report strongest decline in revenues for years

Five of China's largest banks, which hold more than a third of the industry's total assets, all announced that net profit for the first half of 2020 was down more than 10% year-over-year according to new stock market filings. These include: Industrial and Commercial Bank of China (OTCPK: IDCBF), China Construction Bank (OTCPK: CICHF), Agricultural Bank of China (OTCPK: ACGBF), Bank of China (OTCPK: BACHF), and Bank of Communications (OTCPK: BKFCF ). In June, the State Council, China's cabinet, urged financial institutions to sacrifice 1.5T yuan (USD 219B) in profits this year to help businesses by lowering interest rates, postponing loan repayments, and soliciting more unsecured loans high risk smaller borrowers forgive. "Banks have been asked to do 'national service'. They have been asked to support the economy at the expense of their own operational strength," said Jason Tan, research analyst at CreditSights. China's economy contracted 6.8% in Q1 but rose 3.2% in Q2 after Beijing cut interest rates, increased government spending, and ordered banks to offer lavish loans. Jefferies analysts said in a note that Chinese banks "have a high likelihood" of cutting dividends this year after accruing more reserves, but with bank profits likely to rebound after they did in the second half of this year Bottomed out in the year, dividends could return in 2021.