Bank of China says net interest margin will continue to face pressure

BANK of China (BoC) said its net interest margin (NIM) – a key gauge of profitability – will still face significant pressure this year.

Vice-president Zhang Yi made the remarks in an earnings press conference on Tuesday (Apr 2). Five of China’s largest lenders have posted shrinking NIMs, while warning of ongoing property sector risks.

Reductions to the benchmark lending rate earlier this year and existing mortgage rates last year have impacted returns from the asset side, said Zhang.

“We’ll strive to reduce high-cost deposits this year,” he said.

Sheng Liurong, chief finance officer of China Construction Bank Corp (CCB) also said it will further control costs from deposit interest rates, to ease pressure on profitability.

There’s room for further cuts to the benchmark lending rates this year, he added. REUTERS