(29 August 2012 – China) As China Construction Bank Corporation (CCB) faces lower profitability and more bad loans, it still posted its first half net profit rise 15 percent year-on-year.CCB, one of China’s Big Four state-owned banks, traced the improvement to higher interest income and commissions.
It is widely speculated that the bank’s rising number of overdue loans raises questions about its asset quality and future profitability.
The bank’s net profit growth was less than half the 31 percent it reported a year earlier.
Loans overdue for over three months rose 34 percent from 2011 stoking fears about the bank’s asset quality. Overdue loans are an indicator for future bad loans.
CCB said its net profit for the six months ended 30 June was US$16.7 billion (A$16.1 billion), up from US$14.6 billion year-on-year.
Net interest income, which accounted for more than 70 percent of the bank’s operating income, rose 16 percent to US$26.7 billion.
Outstanding loans grew 14.5 percent in the first half compared with an 8 percent rise in the same period last year.
Net-interest margin, a measure of the profitability of a bank’s lending business, remained steady at 2.71 percent compared with 2.70 percent at the end of 2011.