Agricultural Bank of China, the only unlisted lender of the country's Big Four, reported operating profit rose 37 per cent to a record 58 billion yuan last year on higher fee and commission income. Fees from its bank card business jumped 40 per cent to 7.8 billion yuan, which the lender said was 'keeping with its leading place among financial peers'. Agricultural Bank yesterday said deposits grew 17 per cent to 700 billion yuan last year, making it the largest deposit-taking institution in the mainland. Lending increased 31 per cent to 309 billion yuan. The rural lender is the last of the Big Four banks the central government plans to shore up the balance sheet for a listing. It has hired China International Capital Corp and Citic Securities to get it prepared for an initial public offering, which could come next year. A government cash injection of US$80 billion to US$100 billion was expected to bring Agricultural Bank's bad-loan level to below 10 per cent, analysts said. Xinhua yesterday reported capital injection by Central Huijin Investment would take place in the first half of this year. Complicating any turnaround is the bank's traditional role of supporting the relatively poor rural population, which accounts for 80 per cent of China's 1.3 billion people, and the agriculture-focused companies in the troubled state-owned industry sector. 'They basically have to catch up with all the other banks that have been restructuring and bringing in foreign partners to gain experience over the past three to five years,' Core Pacific-Yamaichi analyst Kent Yau said. 'Agricultural Bank is on the ground level while everyone else is on the first or second floor.' Agricultural Bank said it had wiped out 4.2 billion yuan in non-performing loans from its books last year. The statement did not provide the amount of total non-performing loans. The bank had 700 billion yuan of bad loans on its books at the end of 2005, equating to a non-performing loan ratio of 26 per cent. It said last week the ratio had been reduced to 23.6 per cent by the end of last year. Its capital increased 19.9 billion yuan and the return ratio reached 21.92 per cent, about 6.5 percentage points higher than last year. 'Look at the most profitable retail banks such as China Merchants Bank, where fee income only accounts for 10 per cent of total income,' UOB Kay Hian analyst Joe Wong said. 'For most banks, the driver is still the lending spread business.'