Tags: China | Construction | Bank | lending

China Construction Bank Profit Rises on Lending

Sunday, 27 October 2013 02:21 PM

China Construction Bank Corp.’s loan and fee income growth helped boost third-quarter profit at the nation’s second-largest lender by 9.4 percent, matching analysts’ estimates.

Net income rose to 56.8 billion yuan ($9.3 billion), the Beijing-based lender said in a Shanghai stock exchange filing Saturday. Total third-quarter profit at the nine Chinese banks traded in Hong Kong may grow by 11 percent, Deutsche Bank AG estimated before the statement. Industrial & Commercial Bank of China Ltd., the world’s second-largest by market value, and the rest of the country’s five biggest lenders report on Oct. 30.

Construction Bank pledged in August to direct more lending to small and micro-sized businesses, which offer fatter lending margins, as it battles a slowdown in the world’s second-largest economy. While expansion accelerated for the first time in three quarters during the July-September period, China may still post its slowest full-year growth since 1999, according to a Bloomberg survey of economists.

“CCB, along with the other big Chinese banks, should be able to maintain its momentum in profit growth in the near future as they still have their edge in funding,” May Yan, a Hong Kong-based analyst at Barclays Plc, said by phone. “Smaller banks appear to be losing deposits faster than big lenders such as CCB.”

The average estimate of 10 analysts compiled by Bloomberg had called for net income of 57.2 billion yuan. Earnings per share rose to 0.23 yuan from 0.21 yuan a year earlier, according to the statement.

Construction Bank stock fell 0.9 percent to HK$5.71 in Hong Kong trading on Oct. 25, extending its loss this year to 8.2 percent. The city’s benchmark Hang Seng Index has gained 0.2 percent in 2013.

Largest Lenders

Construction Bank is the first Hong Kong-listed Chinese bank to report third-quarter earnings. Along with ICBC, lenders scheduled to report on Oct. 30 include Agricultural Bank of China Ltd., Bank of China Ltd. and Bank of Communications Co.

Construction Bank extended 864.9 billion yuan of new loans in the first nine months of this year, taking the outstanding amount to 8.38 trillion yuan. Non-performing loans rose to 82.1 billion yuan as of Sept. 30 from 80.3 billion yuan three months earlier, according to the statement.

Net interest income rose 8.2 percent to 98.9 billion yuan in the third quarter, while fee income, from businesses such as credit cards, trade finance and custodian services, rose 19 percent to 24.6 billion yuan.

Bad Debt

The bank set aside 9.29 billion yuan of new provisions against soured debt in the third quarter, compared with 8.26 billion yuan a year earlier.

China’s economic growth rebounded to 7.8 percent in the July-September period, accelerating for the first time in three quarters, as Premier Li Keqiang spurred factory output and investment to meet the government’s expansion goal for 2013.

China’s policy makers announced the country’s second national audit of local government financing vehicles’ debt on July 28 amid concern that some may struggle to repay borrowings. Provincial and municipal authorities may have more than 20 trillion yuan of debt, former Finance Minister Xiang Huaicheng said in April, almost double the figure given by the National Audit Office in 2011.

China’s big four banks are “well-provisioned” and LGFV loans are limited to 6.1 percent of their loan books through repayments and restructuring, Tracy Yu, an analyst at Deutsche Bank, wrote in an Oct. 21 report.

Construction Bank’s net interest margin in the first nine months, a measure of lending profitability, narrowed to 2.71 percent, down 3 basis points from a year earlier.

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China Construction Bank's loan and fee income growth helped boost third-quarter profit at the nation's second-largest lender by 9.4 percent, matching analysts' estimates.
Sunday, 27 October 2013 02:21 PM
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