China’s four biggest commercial banks all reported faster profit growth in the first half on Wednesday as Beijing’s “regulatory windstorm” aimed at controlling financial risk boosted larger lenders at the expense of smaller ones. 

For the past decade, smaller lenders have far outpaced larger rivals in terms of asset and profit growth. But that trend has begun to reverse this year.

The People’s Bank of China has pushed up interest rates this year in a bid to discourage leveraged investment in the bond market, benefiting the country’s largest banks — Industrial & Commercial Bank of China, China Construction Bank, Agricultural Bank of China, and Bank of China. Their retail deposit franchises provide a plentiful supply of low-cost deposits, generating excess cash that they lend to smaller rivals in the interbank market. ICBC, the world’s largest bank by assets, said net income rose 1.8 per cent in the first half, up from 0.4 per cent growth in 2016. Bank of China, the fourth largest, posted the fastest net income growth among big lenders, 11.5 per cent, up from 1.9 per cent last yer, and the fastest first-half pace since 2013.