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August 21, 2009

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Rapid credit growth boosts ICBC's net

NET profit at the Industrial and Commercial Bank of China expanded by 3 percent in the first half of this year on a rapid credit growth and was in line with industry's expectations.

The world's biggest bank by market value earned 66.42 billion yuan (US$9.7 billion) in the first six months, up from 64.53 billion yuan in the same period last year, the Beijing-based bank said yesterday, citing international accounting standards.

In the second quarter, ICBC posted a net profit of 31.32 billion yuan, slower than the 35.1 billion yuan earnings in the previous quarter, based on figures subtracted from its interim and first-quarter reports. The second-quarter profit was flat on a year-on-year comparison.

"The bank's sizzling lending growth helped counter falling interest margin," said She Minhua, a Haitong Securities Co analyst. "The industry expected a 3 percent profit growth based on the bank's large lending scale."

The bank's outstanding lending soared 18.9 percent from the start of the year to 864.5 billion yuan amid the country's relatively loose monetary policy. The rise was higher than any of its previous annual lending growth.

The bank managed to cut its bad loan ratio to 1.81 percent by the end of June, down from 2.29 percent at the beginning of the year.

Banks in China extended 7.37 trillion yuan of new yuan loans in the first half of this year, three times the credit a year ago. The lending has already surpassed the 5 trillion yuan target set at the start of the year for the whole of this year.

ICBC's net interest income dropped 11.9 percent on year to 116 billion yuan in the first half. Its fee-based income rose 13 percent to 27.7 billion yuan.

ICBC's net interest margin contracted to 2.25 percent in the first half, compared with 3.01 percent a year ago, after the central bank cut interest rates five times since September last year.

China Construction Bank's interim report is due out today.


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