Industrial and Commercial Bank of China (ICBC), the world's largest bank by assets, has posted a forecast-beating 14.9 per cent rise in third-quarter earnings. The gains came from higher profit margins on its loans and a reduction in its provisions for bad loans. ICBC was the third of the big four mainland banks to report better-than-expected profits, joining Bank of China and Agricultural Bank of China. The fourth, China Construction Bank, reported third-quarter profit growth in line with market estimates. "Larger lenders in the mainland are better weathering the impact of cuts in interest rates and interest-rate liberalisation," said Chen Xingyu, an analyst with Phillip Securities in Shanghai. Chen said the strong results showed the monopoly position of the big four meant they could get better returns on loans, which ensured growth in net interest margins. The net interest margin is the spread between what a bank earns from lending and its cost of funds. The mainland's fifth-largest lender, Bank of Communications, reported an 11.7 per cent rise in third-quarter earnings to 13.43 billion yuan from a year ago. Earnings at ICBC were 62.44 billion yuan in the three months to September, up from 54.36 billion yuan a year ago and exceeding the 60.7 billion yuan average estimate of 12 analysts surveyed by Bloomberg. Net interest income rose 15.9 per cent to 107.31 billion yuan, boosted by an increase in interest-generating assets and an increase in its net interest margin. Total loans at the end of September were 10.9 per cent higher than the 8.64 trillion yuan at the end of last year. The net interest margin was 2.7 per cent at the end of June this year. Bad-loan provisions for the three-month period amounted to 5.7 1 billion yuan, a drop of 33.8 per cent from last year. Chen said the decline was mainly due to a slowdown in loan growth and a better-than-expected credit environment. "Looking forward, net interest income and bad-loan provisions will be the key to the bank's profit growth," he added. The bank said it had 74.75 billion yuan of non-performing loans, a decrease of 373 million from the end of June. The non-performing loan ratio was 0.87 per cent, 0.07 percentage points lower than at the end of last year. Bank of Communications' third-quarter earnings growth was also driven by net interest income, which went up 14 per cent from the year-earlier quarter to 30.71 billion yuan. The bank's net interest margin remained flat at 2.6 per cent at the end of September as the interest rate cuts by the People's Bank of China hindered growth, the bank said. The bank's non-performing loan ratio at the end of September was 0.87 per cent, an increase of 0.01 percentage points from the beginning of the year. The bank made a provision of 3.33 billion yuan in the third quarter, a decrease of 6 per cent from a year ago. In addition, the mainland's first privately owned lender, Minsheng Banking Corp, said its third-quarter profit rose 30.7 per cent to 9.76 billion yuan from a year ago.