Bank of Communications (BoCom), China's fifth largest lender by assets, reported Thursday a 12.02 percent growth in net profit in the first half of the year, down 5.76 percentage points from a year ago, and the weakest performance among the listed banks that have disclosed mid-year results.

BoCom achieved sales revenues of 84.8 billion yuan ($13.8 billion) in the first six months of this year, up 15.17 percent year-on-year, while its non-performing loans (NPLs) increased 4.67 billion yuan or 17.3 percent from early this year, according to the bank's semi-annual report filed Thursday with Shanghai Stock Exchange, where it is listed.

BoCom is the first large State-owned bank to reveal its semi-annual report so far. Its net profit growth ­attributable to shareholders is the lowest among the listed banks that have released semi-annual results.

Previously four joint-stock commercial banks, including Shanghai Pudong Development Bank and China Merchants Bank, had announced their semi-annual reports. All ­reported a falling share of the interest income in total revenues in the first half of the year.

The slowdown in the bank profits is mainly due to the re-pricing of loans and interest rate deregulation, Hu Bin, vice president and senior analyst at Moody's Investors Service, told the Global Times on Thursday.

Affected by the two interest rate cuts in 2012, the net interest margin of BoCom is 2.56 percent, down 5 basis points from a year ago, according to the bank.

Banks were allowed to float deposit rate at 1.1 times the benchmark rate in June 2012, and lower the lending floor to 0.7 times of the benchmark rate in July 2012, as the country pushed forward the liberalization of interest rate. The central bank further removed control of the lending rate on July 19 this year.

Other large State-owned banks are also expected to report slower profit growth, said Bai Tian, a senior financial analyst at Round Stone Finance Academy.

The State-owned banks, including BoCom, were hit by bad debts caused by the massive default of steel trading businesses in East China's Jiangsu Province - one of the most affluent provinces, the 21st Century Business Herald newspaper reported Wednesday.

New NPLs in Jiangsu Province totaled 18.2 billion yuan in the first six months of this year, and steel trading is reportedly the segment with the most serious defaults.

Loans to steel traders accounted for 55.8 percent of the new NPLs of the five State-owned banks including BoCom in the first half of this year, the newspaper reported.

Lifting the ceiling of the deposit rate is only a matter of time, and once the deposit rate is liberalized, the increasing competition among banks to draw deposits will raise the financing cost and will further narrow the bank's interest margins and net profit, Bai said.

The deregulation of the interest rate will prompt banks to develop ­intermediary business such as commission and fees for revenue growth and differentiate their products and services, Zhang Jiangyan, chief partner at Adfaith Management Consulting, told the Global Times.