Ag bank sees hefty profit rise
(China Daily)
Updated: 2005-07-16 09:02

The Agricultural Bank of China (ABC) on Friday reported a hefty profit rise for the first half of this year, along with improvements in asset structure and loan quality.

The State-owned lender chalked up 21.8 billion yuan (US$2.6 billion) in operating profits in the first six months of the year, up 36.4 per cent from the same period last year.

Real spread between lending and deposit rates broadened by 0.06 percentage points from a year earlier, while cost/income ratio dipped by 1.51 percentage points from the end of last year, it said.

Non-performing loans declined by 2.3 billion yuan (US$277 million) from the end of last year, while the bad loan ratio slid by 1.44 percentage points, the bank said. It did not reveal the figures for the end of June.

The bank attributed the improvement in performance to its efforts for efficiency in resource allocation, strengthening capital restraint, and optimizing business structure.

The bank said it tightened lending policies on such industries as steel, cement, aluminium, automobiles and property in the first half of the year, all areas the State is trying to slow down.

New loans, both in the local currency and foreign currencies, totalled 136.9 billion yuan (US$16.5 billion), down 36 per cent on a year-on-year basis, but the percentage of loans made to quality clients rose by 52 per cent, it said.

The structure of its income also improved, with intermediary services accounting for 5.24 per cent of total income, up 0.49 percentage points from a year earlier.

The bank also said its source of funding became more stable in the past six months, with the percentage of term deposit increases rising by 25.6 percentage points.

Chinese banks are facing a widespread problem of term mismatches in deposits, as residents showing reluctance to make term deposits, given the expectations of further interest rate hikes.

The ABC, widely seen as the weakest of the nation's Big Four State-owned commercial banks in terms of capital strength, is still waiting for authorities to approve its joint-stock reform plan.

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