Pressure to revive economy muddies earnings outlook for China’s top banks

A scramble by Chinese policymakers to tackle a debt crisis in the property sector and shore up the economy is set to deal a blow to the earnings prospects for its big banks as they are pressed into the task of boosting credit demand. China's top five state-owned banks are expected to post a sharp decline in revenue and narrower net interest margins (NIM) as they turn in half-yearly results, with China Construction Bank kicking-off the reporting season on Wednesday. The results will come against the backdrop of record-low credit growth in July, default risks at some housing developers and missed payments by a private wealth manager linked to shadow banking that has raised contagion risk to the broader economy.