(19 July 2005 – China) Agricultural Bank of China has posted a 36 percent increase in first half earnings and an operating profit of US$2.64 billion despite the Chinese government’s attempts to keep the economy from overboiling.The bank, which is the smallest of China’s big four lenders, is still hamstrung by the fact that almost a quarter of its outstanding loans are bad debts.
More positively, the bank’s non performing loan ratio has dropped 1.44 percentage points since the end of 2004.
Agricultural Bank’s lending fell in the first six months of 2005, down 78 billion yuan (US$9.4 billion) from the same period in 2004.
However, the bank has diversified from its core business of lending to agribusinesses, to credit cards and other financial advisory services.
The bank said it had quickened efforts to diversify its business given the “abundance of cash on hand this year”.
China’s banks are operating in an environment where they are preparing for increased participation from foreign investors as the market opens up. Reducing problem loans is a major part of this.