Earnings rise 31pc at Pudong Bank

PUBLISHED : Tuesday, 11 July, 2006, 12:00am
UPDATED : Tuesday, 11 July, 2006, 12:00am

Lender records net profit of 1.5b yuan after smaller provisions for bad loans

Shanghai Pudong Development Bank, of which Citigroup owns 4.2 per cent, said unaudited net profit rose 31 per cent in the first half this year, which analysts attributed to the smaller provisions it set aside for bad loans.

The Shanghai-based lender said net profit for the first six months was 1.59 billion yuan, up from 1.22 billion yuan for the same period a year ago. The bank will release an earnings report on August 12.

It said revenue rose 23.2 per cent year on year to 12.69 billion yuan in the first half while operating profit rose 17.9 per cent to 4.23 billion yuan.

'The profit growth may be driven partly by smaller provisions [set aside for impaired loan loss] as income growth is less than the net profit growth,' Moody's Investors Service's analyst May Yan Meizhi said.

Ms Yan said because Pudong Bank did not disclose more details, it was difficult to tell whether it had set aside sufficient provisions after the government ordered banks to tighten lending and launched measures to curb growth in the property market.

Some analysts said mainland lenders such as Pudong Bank also benefited from the expanding economy which boosted demand for loans and other financial services.

The bank said total assets rose 28.1 per cent to 631 billion yuan in the first half.

It did not release figures on loan growth and provisions to show the impact of the latest scandal.

Last month the China Banking Regulatory Commission's Shanghai office suspended the mortgage business of the Lujiazui branch of the bank after the discovery of 126 million yuan in fraudulent loans.

Pudong Bank's return on net assets increased by 1.15 percentage points in the first half to 9.33 per cent.

Earnings per share rose 30.8 per cent to 41 fen and net asset value per share rose 14.7 per cent to 4.35 yuan.