China Construction Bank, the world's No. 2 bank by market capitalisation, reported on Sunday a 31 percent rise in first-half earnings as strong growth in its financial advisory services helped boost earnings.
CCB said it made a net profit of 92.8 billion yuan in January-June, better than market expectations for a 92.3 billion yuan net profit and higher than the 70.7 billion yuan it made a year ago.
"China's economy is expected to maintain steady growth, but the growth rate is likely to slow," CCB said in a statement posted on the Hong Kong stock exchange.
"While the risk of inflation seems to be controllable, the task of economic structural adjustment and transformation of development patterns remains arduous."
It also said it was strictly controlling loans granted to local government financing vehicles (LGFV), but did not give exact numbers. Such loans have been singled out by China's banking regulators as a possible hot spot that could lead to a spike in bad loans. Local governments are banned from borrowing directly from banks, and so many of them set up financing vehicles which take loans to fund infrastructure projects. These vehicles have chalked up an estimated 10.7 trillion yuan ($1.68 trillion) of loans as of end-2010, according to China's state auditor.
The bank is also China's biggest mortgage lender and most exposed to the country's red-hot real estate sector, with investors pushing its shares down by over a fifth in the past three months as worries about a property bubble grow. Bank of America Corp owns about 10 percent of CCB's Hong Kong-listed shares.
Comments
Comments are closed for this article.