China’s top banks, ICBC and BoC, reported weak profit growth in the first half of the year due to the recovery from pandemic restrictions.

ICBC’s largest lender reported a 1.2% increase in first-half profit, while BoC reported a 0.78% increase.

The banks face lower lending rates, government pressure to boost the economy, and bad debts from property developers and LGFVs.

Both lenders’ net interest margins fell in the first half of the year, indicating pressure to expand financial support to the faltering economy.

Guangzhou eased mortgage rules, and falling household and business confidence is expected to impact the banking sector in the second half of the year.