China Construction Bank Profit Jumps 16% on Loan, Fee Growth
China Construction Bank Corp. (939), the world’s second-largest lender by market value, said third- quarter profit climbed 16 percent on higher demand for loans and income from fees and commissions.
Net income rose to 46.2 billion yuan ($7.3 billion), or 0.18 yuan a share, from 39.8 billion yuan, or 0.17 yuan, the Beijing-based bank said in a statement to the Hong Kong stock exchange today. That was in line with the 44.8 billion-yuan median estimate of eight analysts surveyed by Bloomberg News.
The lender joins Industrial & Commercial Bank of China Ltd., Agricultural Bank of China Ltd. and Bank of China Ltd. in reporting an increase in third-quarter profits, surpassing those of the four largest U.S. banks including JPMorgan Chase & Co. The top four lenders in China, the world’s second-largest economy, are headed for record annual profits.
“Construction Bank follows the other big Chinese banks in reporting higher profits and a falling bad debt ratio,” William Fong, a director for Asian equities in Hong Kong who helps manage $49 billion at Baring Asset Management Ltd., said by telephone today. “The third-quarter earnings are in line with the momentum seen in the second quarter.”
Net interest income, or revenue from lending minus payments to depositors, expanded 20 percent to 77.3 billion yuan while fee income from products including credit cards rose 40 percent to 21.1 billion yuan.
Construction Bank gained 3 percent to close at HK$5.85 before today’s earnings announcement, rising for a sixth day.
Bad Loans Decline
Nonperforming loans at Construction Bank declined by 70 million yuan during the first nine months to 64.6 billion yuan, accounting for 1.02 percent of total loans. Provisions set aside against bad debt were 249 percent of nonperforming loans, up 28 percentage points from the end of last year.
Chinese banks’ bad-debt ratio may climb to 1.5 percent by the end of next year, and 1.8 percent by December 2013, according to the median estimate in a Bloomberg survey of seven analysts. China’s gross domestic product grew 9.1 percent in the third quarter, the slowest pace since 2009.
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