Aug. 22 (Bloomberg) -- China Citic Bank Corp. said first- half profit rose 87 percent from a year earlier as it lent more to companies and received preferential tax treatment.

Net income at the nation's eighth-largest bank rose to 3.21 billion yuan ($422 million), or 0.09 yuan a share, from 1.72 billion yuan, or 0.06 yuan a share, a year earlier, Beijing- based Citic Bank said in a statement to the Shanghai stock exchange today. The figures were based on domestic accounting standards.

Economic growth that reached 11.9 percent in the second quarter has allowed Chinese banks to increase profits by extending more loans and selling products ranging from credit cards to mutual funds. In addition, fees from stock trading have soared as the CSI 300 Index jumped 148 percent this year, the best performance among 89 world benchmarks tracked by Bloomberg.

Domestic banks extended 2.5 trillion yuan of new loans in the first six months, 15 percent more than a year earlier, helping power investment in factories, real estate and the stock market. The nation's central bank has responded by raising interest rates four times this year to curb lending.

Citic Bank raised $6 billion in a share offering in April. Its Shanghai-traded shares have gained 94 percent since the debut, while the Hong Kong stock dropped 1 percent.

Chinese banks have raised $61 billion in share sales since June 2005, giving them capital to meet demand for loans. Citic Bank may increase earnings by an average 45 percent annually between 2006 and 2009, according to estimates by UBS AG analysts.

To contact the reporter on this story: Luo Jun in Shanghai at Jluo6@bloomberg.net

Last Updated: August 22, 2007 08:05 EDT