Bank of China

China Citic Bank racks up 43pc surge in profits

PUBLISHED : Sunday, 01 April, 2012, 12:00am
UPDATED : Sunday, 01 April, 2012, 12:00am

Hong Kong-listed mainland lender China Citic Bank beat market expectations to post a 43 per cent increase in net profit last year.

But its chief executive warned yesterday of slower growth ahead for the mainland economy.

The bank's net profit surged 43.28 per cent to 30.82 billion yuan (HK$37.99 billion) last year, thanks to strong growth in net interest income and net fee and commission income.

The profit was higher than the market expectation of about 29 billion yuan.

The bank's net interest income grew 35.26 per cent to 65.11 billion yuan, while its non-interest income, including net fee and commission income, jumped 55.2 per cent to 11.84 billion yuan.

But executive director Chen Xiaoxian said yesterday that the era of high interest income in the mainland banking sector was over.

'The mainland's economic growth is slowing down. The predicted growth in GDP has been lowered to 7.5 per cent this year. The growth in loans and deposits will definitely slow. Also, the interest rate margin is narrowing, which will affect the profit of banks,' he said.

'But, it doesn't mean the profit for banks will slump this year. It means the banking sector is facing a downward trend in interest rate margins.' The bank's net interest margin - the difference between its interest income and the amount paid to lenders - for last year rose 0.37 percentage points to 3 per cent.

Its core capital adequacy ratio - the ratio of its capital to its risk - climbed from 8.45 per cent in 2010 to 9.91 per cent.

Non-performing loans increased slightly to 8.54 billion yuan, while its non-performing loan ratio dropped 0.07 percentage points to 0.6 per cent. The bank has expanded its loans to small businesses in recent years, with its balance in this market rising by 58.7 per cent to 104 billion yuan last year.

But, the growth in loans to the property sector slowed as the mainland tightened up last year on lending in the sector.

Nevertheless, China Citic's loans to the real estate sector grew 26.3 per cent to 78.1 billion yuan.

The bank also said it had issued 14.07 million credit cards 'so far' and planned to increase that to 30 million in three years, but did not specify how many cards it issued last year.

The company declared a final dividend of 0.9 yuan a share.

Meanwhile, the People's Bank of China said in its quarterly report yesterday that it would continue with its 'prudent' policy to ensure steady economic growth, while taking price stability and financial risks into consideration.

The central bank also said it would adopt available policy tools to foster steady and moderate growth in credit.