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BIZCHINA> Top Biz News
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Lending surge lifts ICBC first-half net
By Wang Bo (China Daily)
Updated: 2009-08-21 08:05 Industrial and Commercial Bank of China (ICBC), the world's largest bank by market value, reported a 2.8-percent growth in first half net profit on brisk increase in lending and fee-based revenue.
The bank's net profit edged up to 66.7 billion yuan in the first six months, while operating income dropped by 4.4 percent from a year earlier, to 148.1 billion yuan for the same period. "Dwindling interest margin deteriorated the bank's revenue, while decent fee-based income and lending increase helped ensure profit growth," Fu Lichun, a banking analyst at Southwest Securities, said. In response to the government call to support the economic recovery, the bank has advanced 864.5 billion yuan in new loans, with 449.9 billion yuan flowing to State-backed projects. By the end of June, the bank's loans and advances totaled 5.44 trillion yuan, up 19 percent from the end of 2008, it said in a statement to the Hong Kong Stock Exchange. But net interest income, which accounted for 78.4 percent of the lender's revenue in the first half, declined 11.9 percent to 116.04 billion yuan, as net interest margin contracted to 2.25 percent from 2.95 percent by the end of 2008.
"The pressure of narrowing loan margin might not be that big for the bank, as part of its lending has gone to finance small and medium-sized enterprises (SMEs)," Fu said. In the first half, ICBC gave out 477.3 billion yuan in new loans to SMEs, growing 26 percent from a year earlier, higher than the average 19 percent growth in corporate lending. The bank saw its non-performing loan ratio drop to 1.81 percent at the end of June from 2.29 percent at the beginning of the year. (For more biz stories, please visit Industries)
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