Strong national economic growth helped China Construction Bank post profits of 6.15 billion yuan (about HK$5.76 billion) in the first half of this year, up 35 per cent year on year. Bank spokesman in Beijing, Peng Dingrui, was unable to clarify if the figure represented net profits. Construction Bank typically reports pre-tax profits. Xinhua yesterday quoted a bank official as saying profits from domestic operations were 6.04 billion yuan, while overseas profits were 110 million yuan. Construction Bank had pre-tax profits of 5.19 billion yuan last year, according to state media. China yesterday said its economy roared ahead in the first half, growing a year on year 7.8 per cent. Analysts said state banks suffered from weak profitability despite their large size because of massive bad loans. Construction Bank's non-performing loan ratio stood at 13.2 per cent at the end of last month, down 1.71 percentage points from the beginning of the year, Xinhua said. China wants state banks to lower the bad loan ratios by two to three percentage points a year. Central bank governor Dai Xianglong said earlier this year that the problem loan ratio of the 'Big Four' banks was about 30 per cent based on a new five-tier loan classification system. The aim is to have the big four state banks lower this ratio to 15 per cent in five years. Many Western analysts are sceptical of China's figures for bad loans and say the true number could be closer to half the total. Besides Construction Bank, the other members of the Big Four are Bank of China, Industrial and Commercial Bank of China and Agricultural Bank of China. Construction Bank disposed of about 32 billion yuan worth of bad assets in the first half of this year, recovering 18.3 billion yuan in assets and 13.1 billion yuan in cash, Xinhua said. The bank is planning to sell a package of so-called distressed assets to United States investment bank Morgan Stanley but the deal faced substantial regulatory hurdles, industry officials said. Construction Bank also signed a deal last week to co-operate with the Korea Asset Management Corp on handling bad loans through training and exchanging information. The bank's revenue from intermediary business was 1.83 billion yuan in the first half, while investment earnings were 8.15 billion yuan, Xinhua said. China is pushing banks to diversify beyond traditional services of taking deposits and making loans to other business. China sacked the previous head of Construction Bank, Wang Xuebing, for problem loans he approved while Bank of China president. New head Zhang Enzhao says he wants to take the bank public after massive restructuring. Bank of China's Hong Kong subsidiary will list in Hong Kong later this month, a first for a state-owned bank. In a survey released this month, The Banker magazine ranked Construction Bank third by assets and fourth in terms of tier-one capital among Chinese banks.