Listed banks in China witnessed slower profit growth in 2015, a signal that more changes are needed in this sector, a report released by EY on Monday showed.
According to the report, due to narrower net interest margins and increased provisions for bad debt, the net profit of 26 banks listed in the Chinese mainland totaled 1.33 trillion yuan ($204.73 billion) in 2015, up 2.56 percent from 2014. However, profit growth slowed by 5.47 percentage points from 2014.
The net profit growth of listed banks has slowed every year since 2011.
The net profit of 16 A-share listed banks grew by 2.66 percent in the first quarter of 2016 from a year earlier, slowing by 0.59 percentage point from the net profit growth of 3.25 percent in the first quarter of 2015.
The report said that as of December 31, 2015, the average nonperforming loan (NPL) ratio of 26 listed banks climbed to 1.62 percent, up 0.41 percentage point from the prior year-end.
Since the beginning of 2012, the NPL balance of listed banks has increased every year, and the NPL ratio has risen for three consecutive years.
According to the 2016 first-quarter financial reports of 16 A-share listed banks, the average NPL ratio rose to 1.69 percent, signaling a further decline in asset quality.
To respond to pressure from rising NPL balances, listed banks stepped up efforts in the disposal of NPLs through write-offs and transfers.
"To better cope with pressure on operations, listed banks continued to accelerate and deepen organizational reform, making choices between restructuring business departments and setting up subsidiaries for business segments and business lines," Frank Jiang, partner of EY Financial Services in Greater China, said in a note sent to the Global Times.
The report also said Internet finance and new technologies have become the new growth drivers for listed banks.
