China Construction Bank yesterday reported a 1.7 percent decline
in net profit last year as its tax break lapsed.
The bank said its net profit in 2006 was 46.3 billion yuan, or
0.21 yuan per share, compared with 47.1 billion yuan, or 0.24 yuan
per share in 2005.
But factoring out the impact of a tax break in 2005, adjusted
net profit rose by 18 percent. The bank enjoyed a tax cut of 7.8
billion yuan given to it in 2005 for its restructuring and
preparation for the Hong Kong initial public offering (IPO) that
year.
"The result meets market expectations. Its adjusted net profit
growth, along with growth in interest income, is satisfactory,"
said Louise Wong, director of Hong Kong-based Phillip Asset
Management.
The bank's net interest income rose 20.4 percent to 140.4
billion yuan last year.
"We maintained the advantage in our traditional wholesale
business including infrastructure loans and also developed new
businesses such as investment banking, SME financing, trust and
retail," said bank chairman Guo Shuqing yesterday.
The bank's infrastructure loans increased 29 percent last year.
Outstanding personal loans including mortgage loans stood at 585
billion yuan by the end of last year, up 28.9 percent over a year
ago, the highest among the country's commercial banks.
"Its fee income, which jumped as much as 60 percent, is quite
high among its peers," said Wong from Phillip Asset Management.
Earlier, Bank of China had reported a 12.07 percent growth in
non-interest income and the Industrial and Commercial Bank of China
reported a growth of 55 percent.
China Construction Bank's fee and commission income, 13.57
billion yuan in 2006, accounted for 8.95 percent of its total
income, 2.38 percentage points higher than a year ago.
"However, its foreign exchange business saw losses last year and
its impaired loan hasn't shown any improvement," Wong said.
"But all in all, the bank remains one of our preferred long-term
Chinese banks given its proximity to China's robust growth. I think
the bank has a very dynamic management team."
China Construction Bank also announced yesterday that it will
further cooperate with its strategic partner, Bank of America which
holds an 8.5 percent stake in it in the credit card business.
The two will first establish an independent credit card business
unit soon. They will then set up a credit card joint venture when
relevant legal and regulatory permission is obtained.
Under a memorandum of understanding signed last week, CCB will
hold a 63 percent stake in the joint venture and Bank of America
the rest, with both parties' stakes subject to a lock-up period of
no less than three years.
(China Daily April 17, 2007)