Summary of Key Performance
Bank of Communications (BOC) exhibited solid performance in the first half of 2026, with both net profit (RMB 47.874 billion, an increase of 4.04%) and revenue (RMB 142.343 billion, an increase of 6.73%) showing growth. This success is attributed to a combination of strategies that include optimizing both deposit and loan operations, deepening industry involvement, and leveraging the advantages of its headquarters in Shanghai. On the deposit side, the bank reduces costs by attracting highly loyal customers with stable funds. On the loan side, it allocates funds to industries with long-term value, such as advanced manufacturing and the green economy. Additionally, it utilizes its location in Shanghai to provide cross-border and comprehensive services, adopting a long-term and stable business approach.
Detailed Analysis
1. Deposit Side: Reducing Costs by Attracting Loyal Customers
The foundation of a bank's profitability lies in attracting deposits at low costs and lending at high returns. BOC's deposit growth in the first half of the year was stable, with total customer deposits approaching RMB 10 trillion, and the growth rate of domestic RMB deposits outpacing that of its peers.
- Corporate Deposits as a Key Driver: Corporate deposits increased by over RMB 380 billion, accounting for more than 55% of the total. The bank focuses on serving key enterprises and the entire supply chain, keeping their funds within its system.
- Strong Retail Customer Base: With 208 million retail customers, BOC maintains a loyal customer base through frequent services such as salary and social security disbursements. Even despite lower deposit interest rates, customers are willing to renew their deposits. This strategy brings two benefits: stable funding and the potential for further cost reduction when fixed-term deposits mature and interest rates decrease.
- Improved Profitability: The interest margin (net interest yield) increased by 0.02 percentage points compared to last year, with interest income accounting for 65% of total revenue, indicating effective cost control.
2. Loan Side: Investing in Promising Industries
The direction of loans significantly influences a bank's long-term earnings and risks. BOC has increased its lending to real economy entities, particularly in four key areas:
- Advanced Manufacturing and Green Economy: Loans to the manufacturing sector grew by 12.89%, green loans by 9.67%, and loans to core industries of the digital economy by 16.58%. These sectors are supported by the state and have significant growth potential.
- Integrated Financial Services for Technology Enterprises: Technology companies at all stages (from startups to maturity) require various financial services. BOC offers a comprehensive approach including loans, equity investments, leasing, and investment banking services. For example, its leasing business, BOC Finance Leasing, is leading in the shipping sector, with leasing transactions exceeding RMB 50 billion. Risk assessment has evolved to consider more factors, such as the company's team, industry prospects, and future potential, in addition to past financial statements and collateral.
- Strong Asset Quality: The non-performing loan ratio is 1.3%, and the provision coverage ratio is 203.8%, indicating robust risk management.
3. Leveraging Shanghai's Advantages for Unique Services
As the only major state-owned bank with its headquarters in Shanghai, BOC fully exploits this strategic location:
- Strong Contribution from the Yangtze River Delta: The Shanghai branch led the city in loan growth, with loans in the Yangtze River Delta region increasing by over RMB 170 billion, contributing nearly half of the bank's profits and 40% of its revenue.
- Fast Progress in Cross-Border Finance: Shanghai's status as an international financial center has led to a 12.6% increase in cross-border customers and a 16.5% increase in international payment volumes. The bank's cross-border trade financing balance also increased by 70%. Services like the "BOC Trade Finance" platform streamline cross-border settlements, financing, and currency risk management, utilizing intelligent systems for greater efficiency.
- Digital Transformation: Artificial intelligence is used in customer service and risk management, such as automated review of trade documents, which saves time and ensures accuracy.
4. A Comprehensive Approach for Sustainable Growth
BOC's business strategy is not based on individual efforts but on the interdependence of three key areas:
- Stable Deposits to Fund Loans: Providing sufficient and inexpensive funds for loan issuance.
- Lending to Growth-Oriented Industries: channeling funds into sectors with potential for long-term growth.
- Leveraging Shanghai's Advantages: Transforming the bank's location, licenses, and technology into value for customers to expand market share.
This integrated approach enables BOC to achieve a balance between stable growth and high quality, even in an era where scale is no longer the sole focus.
(Note: The analysis is based on the provided news content and does not constitute investment advice.)