Lender fails to cut bad loan ratio, which hits 23.5pc Operating profit at Agricultural Bank of China, the only one of the Big Four mainland banks yet to be restructured, soared 65.3 per cent to 96.1 billion yuan (HK$108 billion) last year, the bank said yesterday. But the country's fourth-largest lender failed to make any headway in its battle to reduce its ratio of bad loans, which grew 0.07 percentage point to 23.5 per cent, by far the highest proportion of any mainland bank. The bank attributed the increase in non-performing loans to 'stricter loan quality standards' put in place in preparation for a stock-market listing, which might take place later this year. Pre-tax profit last year was 32.6 billion yuan, the bank said in a statement published by the official Financial News. Loans grew 10.5 per cent to 3.48 trillion yuan - a modest increase compared with other big lenders - taking outstanding loans to 5.28 trillion yuan. Loans to the agricultural industry totalled 1.2 trillion yuan, 34.8 per cent of the total, reflecting pressure from Beijing to help boost agricultural productivity. Fee-based income - a growing revenue stream eagerly chased by all mainland banks - rose by 9.5 billion yuan to 23.4 billion yuan, accounting for 14.7 per cent of total earnings. Last year was a bumper year for almost all lenders, which saw earnings buoyed by strong loan expansion and fees derived from the booming stock market. Although strong loan growth amid rapid economic growth had dramatically reduced the number of bad loans in the banking system, analysts said it was natural for Agricultural Bank's non-performing loan ratio to remain high. 'It is not surprising to see the NPL ratio holding steady just before restructuring, as auditors are currently looking very closely at the figures,' said Charlene Chu at Fitch Ratings. Non-performing loans held by the top five state lenders - Bank of China, Industrial and Commercial Bank of China, China Construction Bank Corp, Bank of Communications and Agricultural Bank - totalled 1.11 trillion yuan at the end of last year, giving a ratio of 8.05 per cent, according to the banking regulator. 'Of the total amount of NPLs in the banking system, upwards of half are on ABC's balance sheet. When these are cleared up, that will bring down the ratio of the whole system,' Ms Chu said. Agricultural Bank's long-delayed restructuring is finally expected to begin later this year, two years after the original plan was rejected by regulators. Beijing plans to inject cash from China Investment Corp, the country's sovereign wealth fund, to recapitalise the lender before its proposed listing. With the bank holding more than 800 billion yuan of bad loans on its books, the total bailout package may be as high as US$100 billion. Agricultural Bank posted a first-quarter operating profit growth of 71 per cent to 34 billion yuan, Xinhua reported this month.