China Construction Bank first-half profit up 27 percent on bigger fee business

China Construction Bank profit up 27 percent

BEIJING — State-owned China Construction Bank Ltd., the country’s third-largest commercial lender, said its first half profit rose 27 percent on a surge in fee-based businesses including credit cards and wealth management.

Profit for the six months ending June 30 was 70.8 billion yuan ($10.4 billion) compared with 55.8 billion yuan a year earlier, the Beijing-based bank reported Monday.

The rise was driven by a 44 percent jump in fee and commission business to 33.6 billion yuan ($4.9 billion), the bank said. Interest income rose 15 percent to 117.8 billion yuan ($17.3 billion) amid strong credit demand.

Construction Bank said it was promoting credit cards, wealth management products, advisory services for mergers and acquisitions and other fee businesses to complement its lending business. It said credit card fees rose 60.4 percent.

China’s banks avoided the credit turmoil that battered Western lenders and Construction Bank said it did well out of Beijing’s massive stimulus, which was based on heavy borrowing by state companies and others.

The bank’s cost advisory business “grew by leaps and bounds” due to stimulus-financed spending on building highways and other infrastructure, said its vice chairman and president, Zhang Jianguo, in a statement.

Some analysts suggest Chinese lenders could face a rise in bad loans following the rapid increase in lending during the stimulus. The Finance Ministry said last week banks might face some difficulty collecting on loans to the investment arms of local governments but said the problem is not so widespread that the industry faces systemic risk.

Construction Bank said it was taking steps to reduce exposure to risky sectors by tightly controlling new loans to such investment agencies and restraining the growth of lending to the real estate industry.

The bank announced in April it plans to raise up to 75 billion yuan ($11 billion) with a share sale after regulators ordered major Chinese banks to replenish their capital following record lending last year to support the stimulus.

Construction Bank: www.ccb.com/en/home/index.html