Agricultural Bank of China, the third largest lender by assets on the mainland, missed analysts' earnings estimates for 2011 after making large provisions for downturn risks.
Jiang Chaoliang, who took over as chairman from Xiang Junbo in November, said the 23 billion yuan (HK$28.2 billion) provision made in the last quarter would not translate into a deterioration in asset quality.
The bank's net profit rose about 29 per cent to 121.9 billion yuan year on year, lower than the average estimate of about 129 billion yuan in a Bloomberg survey of analysts.
The fourth-quarter provision was nearly double what the bank made in the same period the previous year, raising concerns about rising risks.
'Even though the bank reiterates that the provisions were made out of prudential considerations, the market may have different thoughts,' said Sheng Nan, a senior analyst at CCB International Securities.
The bank's bad debt ratio related to local-government financing vehicles (LGFVs) increased year on year and fee income was weak, analysts said. Non-performing-loan ratio related to LGFVs, companies set up by local governments to borrow on behalf of them from banks, reached 1.45 per cent, up 45 basis points compared with the first half of last year.
Total outstanding LGFV loans reached 399.7 billion yuan last year, about 7.1 per cent of total loans. Non-performing LGFV loans reached 5.8 billion yuan.