Through steady loans growth Bank of China (BOC), the mainland's
second-largest lender, posted a better than expected 28 percent
rise in its first-half earnings yesterday.
Also the mainland's top foreign exchange lender BOC notched up a
net profit of 19.5 billion yuan (US$2.45 billion) in the first half
compared with 15.2 billion yuan (US$1.9 billion) a year ago. The
country's booming economy with 10 percent-plus growth assisted the
bank's lending business and boosted its earnings from net
interest.
BOC's total loans rose 7.6 percent to 2.4 trillion yuan (US$300
billion) from the end of 2005. Its mainland loans grew 9.6 percent.
Net interest income rose 12.3 percent to 54.82 billion yuan
(US$6.85 billion) from a year earlier while non-interest income
increased 16.9 percent to 14.68 billion yuan (US$1.835
billion).
But analysts said the business environment for mainland lenders
was not as good as it had been and cited the central bank's
interest rate rise and credit tightening.
"Investors have doubts about how these lenders will do under the
ongoing macroeconomic controls," said Fu Hung-man, an analyst with
Polaris Securities. "BOC along with the other banks could slow down
a bit due to the tightening policies," he added.
But the bank said the government's move to prevent the economy
from overheating by curbing easy credit wouldn't have a big impact
in the second half. "We've a diversified range of products and we
don't solely depend on loans," said President Li Lihui.
"Our loans growth in the first half was slower than that of
China Construction Bank (CCB) or Bank of Communications but this is
Bank of China's strategy to maintain stable loans growth," said Li.
And BOC didn't "lend a lot in the overheated sectors" which would
help it avoid any negative impact from the current tightening
steps, he added.
The bank is confident it'll meet its target of earning 33
billion yuan (US$4.125 billion) for the full year set in its Hong
Kong initial public offering (IPO) prospectus. But some said the
figure could be higher. A Reuters poll of 10 analysts put the
estimate at 36.8 billion yuan (US$4.6 billion).?
Li said CCB's recent acquisition of Bank of America's Hong Kong
and Macao business wouldn't pose a threat to BOC citing the
lender's experience and extensive network in overseas markets.
CCB last week announced it would buy Bank of America (Asia) for
US$1.24 billion which is the largest overseas acquisition by a
mainland lender.
BOC's Hong Kong-traded shares gained more than 13 percent from
their IPO price of HK$2.95 (38 US cents) compared with a 10 percent
increase in the shares of smaller rival CCB during that time.
The bank raised a total of US$11.2 billion in its Hong Kong IPO
in June and US$2.5 billion in a Shanghai listing the following
month.
Its Hong Kong arm BOC Hong Kong (Holdings) Ltd, Hong Kong's
second-largest lender after HSBC, also posted a higher than
expected interim profit yesterday.
(China Daily August 30, 2006)