China's "big four" banks suffered rare profit declines in the first half of the year and its two oil giants posted losses, joining a growing global tide of pandemic-induced red ink.

Bad-loan provisions rose as the pandemic hammered Chinese business activity, causing a historic first-quarter contraction and weighing on an economy that was already in a long-term growth slowdown.

Bloomberg News said the profit declines -- reported over the weekend -- were the largest in more than a decade for the banks, which are closely supervised by the Chinese government and for years have typically posted slight but steady increases.

"The pandemic sent the world economy into a serious recession, posing heavier pressure on banks' business operations and asset quality in 2020," Industrial and Commercial Bank of China ICBC said in an earnings report.

ICBC, the world's largest lender in terms of assets, and Bank of China both said first-half profit fell around 11 percent, while China Construction Bank and Agricultural Bank of China each reported a decline of around 10 percent.

Shares in the four banks, all listed on the Hong Kong and Shanghai stock exchanges, were barely changed on Monday.

ICBC also indicated in its report that profit was likely impacted by government-directed initiatives to enlist financial institutions in the national pandemic recovery effort by extending credit to keep the economy steady.

The banks warned of further disruptions ahead.

"The global economy will face a variety of adversities in the second half of 2020, including sharp contraction in international trade and investment, turbulent international financial markets, restricted international exchange, economic de-globalisation and rising geopolitical risks," ICBC warned.

China's 'big four' banks, including ICBC, have suffered a rare profit decline in the first half of 2020 as the global economy reels from the coronavirus pandemic
China's 'big four' banks, including ICBC, have suffered a rare profit decline in the first half of 2020 as the global economy reels from the coronavirus pandemic AFP / JOHANNES EISELE

Sinopec, Asia's biggest refiner, swung from a profit in the first half of last year to a loss of 21.17 billion yuan ($3.2 billion) as the pandemic depressed demand.

It was the company's worst-ever loss over a half-year period, according to Bloomberg.

PetroChina, the country's biggest oil producer, posted an even bigger loss of 29.98 billion yuan.

Oil firms have been hit in part by a crash in oil prices this year, also triggered by the pandemic.

The two companies' shares rose more than two percent on Monday.

The coronavirus outbreak, which first emerged in China late last year, caused a 6.8 percent contraction in the Chinese economy -- the world's second-largest -- in the first quarter.

Growth returned in April-June, with the economy expanding 3.2 percent.

The Chinese banks are just the latest institutions to report pandemic damage.

British-based, Asia-focused lender HSBC reported a 69 percent slump in earnings earlier this month, and top French bank Societe Generale announced a second-quarter loss of more than one billion euros.

UBS, Barclays and others also have reported major financial hits linked to the pandemic.