Lower interest rates continued to put pressure on margins at the Agricultural Bank of China in the six months to June.

The lender’s net interest margin, a key measure of profitability for banks, dropped to 2.31 per cent during the period, down from 2.78 per cent in the same period last year and 2.93 per cent in the first half of 2014.

Net interest income fell to Rmb198.96bn ($29.84bn), down from Rmb219.49bn in the same period last year.

The bank said “the directors do not recommend any interim dividend for the six months ended 30 June 2016.”

Net profit crept up to Rmb 105.1bn from Rmb104.3bn in the same period last year.

The bank struck a cautious tone over the state of the global economy:

In the first half of 2016, the global economic situation remained complex, with economic growth slowing. Affected by the restrictions of their own structural factors and impact of geopolitical factors, the economic growth of developing countries further slowed, and the vulnerability of certain economies increased.

But it was notably more upbeat regarding the prospects of the Chinese economy:

Looking forward to the second half of the year, it is expected that global economies will continue to experience unbalanced recovery and the Chinese economy is expected to experience structural adjustment and promotion of structural reform.

The development of China’s new economy demonstrated a favorable growth trend as high technology industries, new businesses and new business models maintained rapid growth. The initiative of “cutting overcapacity, cutting excess inventory, deleveraging, reducing costs and strengthening points of weakness” started to take effect. The profits of industrial enterprises started to improve and inventories of commercial houses trended downwards. Investment in key areas and weak areas increased rapidly.

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