China's banks face earnings squeeze amid rate reform, trade war gloom

BEIJING/SHANGHAI: China's banks face pressure on earnings and asset quality in the coming months as interest rate reforms squeeze margins and a Sino-US trade war adds to economic uncertainty.

"The trade war causes uncertainty, and there is downward pressure on the economy," Gu Shu, president of ICBC, said on Thursday after his bank posted a 4.7 per cent rise in profit. He said a government drive to encourage banks to lower lending rates, including through its reform earlier this month of the loan prime rate , was putting pressure on earnings.

Hou Weidong, vice-president of BoCom, told an earnings briefing that"China's commercial banks are facing a great amount of pressure on asset quality".

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