Chinese economy


published: 7.08.2023

Opinion Piece: Chinese banks' profit suffering from shrinking net interest margin notwithstanding the reopening

Bruegel Senior Fellow Alicia García-Herrero breaks down how China’s difficult economic situation in the past few years has led to flatter profit growth for banks on average, but still better than one could imagine given the poor state of the economy. Now, instead, policy countercyclicality means that banks are not going to benefit from the recovery as much as expected, and the low investment sentiment in China constitutes a particular challenge for the banks to turn profits.