Bank of China, the mainland's fourth-largest lender by assets, said it would stem the slide in credit quality and boost fee income, after profit growth slowed sharply in the first half. Net profit rose 7.6 per cent to 71.6 billion yuan (HK$87.6 billion) in the first six months compared with the same period last year, when profit grew 19 per cent. The slower profits were mainly due to a weaker economy, regulatory changes and the absence of one-time gains that bolstered earnings last year. Overdue loans rose 19 per cent from the end of last year, but the bank managed to reduce the total amount of bad loans as well as non-performing-loan ratios while other lenders struggled with deteriorating asset quality. Reserves for bad loans increased, but provisions fell 25 per cent to 9.2 billion yuan. Bank of China president Li Lihui yesterday said this was mainly because the bank took measures last year and had already boosted provisions beforehand. "Our reserves are sufficient and we think credit quality risks are in control," Li said. Bank of China said it selected loan customers carefully and would not increase loans to local government financing vehicles - which borrow on behalf of local governments - which are often barred from doing so. The bank said it hoped to raise the contribution of overseas business revenue by about 8 percentage points to 30 per cent within three to five years. Li said the bank would expand in regions including Latin America, the Middle East and Africa, while maintaining its strength in the US and Europe. The bank's non-interest income, such as revenue from trade finance and services, fell 36 per cent in the second quarter compared with the first, to 14.34 billion yuan, due to certain regulatory clampdowns, sluggish financial markets, and thinning yuan settlement income because of yuan depreciation. The total issuance of wealth management products fell 19.9 per cent to 670 billion yuan compared with the end of last year.