Industrial and Commercial Bank of China, the mainland's
largest lender, and China Merchants Bank said first-half earnings surged as the
country's growing economy continued to prompt companies to borrow more to
ICBC yesterday said it might report a more than 50 per cent growth in net
profit for the first six months of the year while China Merchants Bank, the
country's seventh-largest lender, said first-half profit might have more than
The two banks, both listed in Hong Kong and Shanghai, will provide figures
after audits have been completed.
"The increase in net profit primarily comes from increases in credit and
capital gains and a significant increase in intermediary business," ICBC said.
Mainland banks are earning more interest on their expanding loan portfolios.
Beijing's policy to slow lendings, combined with competition from foreign banks,
is pushing them to expand into fee-based businesses such as wealth management
and potentially insurance.
Beijing-based ICBC posted a net profit of 25.14 billion yuan, 10 fen per
share, in the first half of last year, based on mainland accounting standards.
In the first quarter of this year, the lender posted a net profit of 18.7
billion yuan. It did not provide comparative figures for the result.
"We believe ICBC's robust first-quarter results were a reflection of
improving sector fundamentals and we expect stronger performance for the other
banks that were bigger beneficiaries of the previous interest-rate hikes, have
faster loan growth and less urgency to increase the coverage ratio," Citigroup
said in a report.
Shenzhen-based China Merchants Bank, which reported a 71.9 per cent surge in
net profit to 2.46 billion yuan for the first quarter, said first-half profit
might have more than doubled due to increased loans, wider interest spreads and
accelerated growth in non-interest income.
China Merchants Bank reported a net profit of 2.79 billion yuan, 23 fen per
share, in the first half, also based on mainland's accounting standards.
The bank said earlier that its business outlook remained positive due, in
part to rising net interest margins.
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