UPDATE 1-Two of China's “Big Five" lenders post over 40% Q4 profit, steady margins.

* ICBC, BoCom log strong Q4 net profit

* Net interest margins for both lenders hold steady

* Non-performing loan ratios stay flat (Adds details)

BEIJING/SHANGHAI, March 26 (Reuters) - Two of China’s largest lenders, Industrial and Commercial Bank of China (ICBC) and Bank of Communications Co Ltd (BoCom) ,, booked a jump in fourth-quarter net profit on Friday of well over 40%.

It was the first profit gain in three quarters for both lenders.

During the first three quarters of 2020, Chinese lenders made hefty loan-loss provisions as Beijing urged the sector to step up lending to pandemic-hit sectors, but many have begun to see improvements in earnings in tandem with an economic recovery and are expected to continue to do so throughout the year.

ICBC, the world’s biggest-listed lender by assets, reported a 44.2% jump in fourth-quarter net profit, while BoCom logged a 49% jump over the same period.

For ICBC, profit for the full year increased 1.2% to 315.9 billion yuan, above a Refinitiv estimate of 290.2 billion yuan drawn from 24 analysts.

Over the same period at BoCom, profit climbed 1.3% to 78.3 billion yuan, also beating an average estimate of 70.2 billion yuan from 15 analysts polled by Refinitiv.

For both lenders, the net interest margin (NIM) - a key guage of bank profitability - stayed mostly steady, while non-performing loan ratios also remained flat.

Analysts said NIM trends were likely to stay favourable to banks this year.

“Banks’ average net interest margin is unlikely to narrow further from the 2020 level of 2.1% because of the central bank’s gradual return to a neutral monetary policy stance,”said Moody’s in a March China Banking outlook.

$1 = 6.5390 Chinese yuan renminbi Reporting by Zhang Yan, Cheng Leng in Beijing and Engen Tham in Shanghai; Editing by Toby Chopra & Simon Cameron-Moore