Bank of Communications reported 29 per cent growth in second-quarter profits yesterday, but analysts warned this would not be sustainable in the latter half of the year because of a slowdown in lending. Bocom, the nation's fifth-largest bank, said earnings rose to 9.91 billion yuan (HK$11.34 billion) from 7.66 billion yuan a year earlier, thanks to sharp loan expansion and a higher interest margin. President Niu Ximing said yesterday the rise in profit was a result of rapid expansion in business and admitted the bank would face increasing pressure to sustain such growth. The second-quarter performance was two percentage points lower than the first-half earnings growth of 31 per cent. For the first six months of this year, Bocom extended 260 billion yuan in new loans, 12.6 per cent more than the outstanding amount at the end of last year. The Shanghai-based bank targeted loan growth of 18 to 20 per cent for the full year, executive vice-president Dicky Yip said in June. This would mean lending of about 153 billion yuan in the second half, about 40 per cent less than in the first six months. 'The central government is likely to stick to its policy of maintaining moderate loan growth,' Changjiang Securities analyst Xu Rongcong said. 'This will make it difficult for banks to maintain high growth since they have to comply with the full-year loan quota.' Beijing has limited lending to 7.5 trillion yuan this year, 2.1 trillion yuan less than the amount extended last year in a lending spree to support the government's stimulus efforts but that has now led to asset bubble fears and soaring inflation. Mainland banks provided loans of 4.6 trillion yuan in the first six months. Bocom said first-half net profit was 20.43 billion yuan, up 30.1 per cent on a year earlier, while net interest margin grew 22 basis points to 2.43 per cent. Non-performing loan ratio stood at 1.22 per cent at the end of June, against 1.36 per cent at the beginning of the year. The bank set aside 5.27 billion yuan in provision for bad loans, up 16.77 per cent from a year earlier. 'Risk-control management will be strengthened to ensure stable growth,' chief financial officer Yu Yali said. Beijing has intensified oversight of loans to financing vehicles of local governments - state-owned companies responsible for raising funds to replenish infrastructure projects. Some of these vehicles are suspected of becoming insolvent and worries of an uncontrollable bad-loan growth prompted regulators to conduct a thorough investigation. Bocom vice-president Qian Wenhui said the bank was still reviewing the loans to the financial vehicles and it would be months before an assessment could be made.