BoCom Second-Quarter Profit Rises 13% on Higher Fee Income

Aug. 21 (Bloomberg) --Bank of Communications Co., the Chinese lender part-owned by HSBC Holdings Plc (HSBA), reported a higher-than-estimated 13 percent increase in second-quarter profit as fee income surged.

Net income climbed to 17.1 billion yuan ($2.8 billion) from 15.2 billion yuan a year earlier, based on figures announced by the Shanghai-based lender known as BoCom. That exceeded the 16.6 billion-yuan median estimate of 10 analysts surveyed by Bloomberg News.

BoCom, the nation’s fifth-largest lender by market value, bucked the trend of a profit slowdown at smaller rivals Shanghai Pudong Development Bank Co. (600000) and Industrial Bank Co. Fee income from services such as the sales of wealth management products jumped 30 percent to 7 billion yuan.

Hong Kong-listed Chinese banks may report average second-quarter profit growth of 8 percent, down from 11.5 percent in the first three months, Sanjay Jain, a Credit Suisse analyst, forecast in a note on July 30. There is “potential for further deceleration” of profit in the second half of the year, according to the note.

BoCom had 3.2 trillion yuan of loans at the end of June, an increase of 8.6 percent from the beginning of the year. Non-performing loans rose to 31.7 billion yuan as of June 30, compared with 30.74 billion yuan in March.

In the first half, BoCom’s profit rose 12 percent to 34.8 billion yuan, according to today’s statement. The bank’s net interest margin, an indicator of lending profitability, contracted 5 basis points to 2.56 percent after the central bank cut benchmark interest rates twice in 2012.

Net interest income rose 11 percent to 33 billion yuan in the second quarter.

Shares (3328) of BoCom, which closed unchanged today, have lost 9.9 percent in Hong Kong this year. That compared with a 3.7 percent decline in Hong Kong’s benchmark Hang Seng Index.

To contact Bloomberg News staff for this story: Jun Luo in Shanghai at jluo6@bloomberg.net

To contact the editor responsible for this story: Chitra Somayaji at csomayaji@bloomberg.net

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