(Bloomberg) -- China’s largest state owned bank posted scant gains in earnings for last year as margins weakened.

Net income at Agricultural Bank of China Ltd. grew 3.9% to 269.36 billion yuan ($37.3 billion), it said in a Thursday filing. Bank of China Ltd. reported earnings rose 2.4% to 231.9 billion yuan.

The reports followed similar results and margin contractions at peers Industrial & Commercial Bank of China Ltd. and Bank of Communications Co. on Wednesday. The nation’s largest state-owned banks are struggling to maintain growth in the past year as they followed Beijing’s order to help pump up the domestic economy as well as rescue its debt-laden property developers and local governments. 

China’s slowing economy has put downward pressure on interest rates, and the nation’s protracted property downturn shows few signs of improvement with deepened home price declines and more developers in distress, ratcheting up the challenge for authorities. 

Agbank’s net interest margin narrowed to 1.6% from 1.9% while its non-performing loans ratio fell to 1.33% from 1.37%. Bank of China’s net interest margin narrowed to 1.59% from 1.75%.

The state banks have heeded Beijing’s call to trim loan rates and step up financing support for developers. That has eroded their balance sheets as problematic property loans and residential mortgages piled up. 

ICBC has increased efforts to manage risks associated with real estate developers and projects, according to Wang Jingwu, the bank’s vice president. Bocom’s Vice President Yin Jiuyong said the pressure to keep asset quality in check remains “immense” this year as it will take time for home sales and developers’ liquidity conditions to recover, but the bank’s overall risk from its property exposure is still manageable.

Here’s a summary of key earnings metrics compared with the previous year:

The big lenders’ profitability and asset quality are in focus as investors gauge their resilience in an economy that’s heavily reliant on bank lending to regain momentum. Combined profits at China’s commercial banks rose 3.2% to 2.38 trillion yuan last year, the slowest pace since 2020, according to official data. Outstanding bad loans climbed to a record 3.23 trillion yuan.

The sector’s net interest margin narrowed to a record 1.69% at the end of last year despite rounds of cuts to deposit rates. That’s well below the 1.8% threshold regarded as necessary to maintain reasonable profitability.

Margins are under further pressure this year as the government continues to keep borrowing rates low to boost the economy. ICBC and CCB could see their margins compress by another 10 basis points this year, Bloomberg Intelligence analyst Francis Chan wrote in a note.

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