China Construction Bank profit up 26pc in 2010

BEIJING, Mar 27 (AFP): China Construction Bank Corp., the country's second largest lender, said Sunday its net profit rose 26 per cent last year on the back of higher interest income and commissions. Profit growth was nearly double the 15 per cent rise in 2009, showing CCB's business regained momentum after the global financial crisis. But the bank said it would slow credit growth this year as Beijing steps up efforts to cool the economy and fight inflation. The state-run bank said its net profit for 2010 rose to 134.84 billion yuan ($20.55 billion) from 106.76 billion yuan a year earlier. Net interest income climbed 19 per cent to 251.50 billion yuan while net fee and commission income jumped 38 per cent to 66.13 billion yuan. Looking ahead, the bank said China's shift of its economic base from investment and exports towards boosting consumption would provide opportunities and pose challenges. "On the positive side... China's relaxing of its restrictions on banks' comprehensive operations is providing excellent opportunities for the bank to develop new businesses," it said in a statement. "The accelerated liberalisation of interest rates and exchange rates will also give the bank greater freedom for financial innovation. "On the negative side, the expansion of liability business is becoming more difficult because of tighter liquidity and volatile capital markets," it added. CCB, which is the country's biggest lender to home buyers, said it was targeting 13 per cent loan growth on the domestic market this year. The bank's outstanding yuan-denominated loans grew 18 per cent last year, slowing from a 27 per cent surge in 2009. China has raised interest rates three times in recent months and repeatedly hiked the amount of money banks must keep in reserve in its efforts to control soaring prices, which top leaders fear could stir social unrest. CCB said its loans to the real estate industry grew 12 per cent last year, compared with 19 per cent in 2009. Total nonperforming loan ratio dropped to 1.14 per cent from 1.50 per cent a year earlier. "In addition, the bank continued to improve its customer base, with new loans principally targeting prime customers with solid financial strength and high qualifications in regions where property prices were stable," the bank said. The government has implemented a number of measures to restrain the red hot property market including bans on purchases of second homes in some cities and a property tax trial in Shanghai and the southwestern mega-city of Chongqing.