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China Construction Bank's 2007 net profit grows 49%

(Xinhua)
Updated: 2008-04-12 10:25

Mainland-based banking giant China Construction Bank said on Friday it recorded a net profit of 69.14 billion yuan ($9.88 billion) in 2007, a rise of 49.27 percent year on year, in line with market expectations.

Mainland-based banking giant China Construction Bank said on Friday it recorded a net profit of 69.14 billion yuan ($9.88 billion) in 2007, a rise of 49.27 percent year on year, in line with market expectations. [Asianewsphoto]

The bank, one of the state-owned commercial banking giants listed in Hong Kong, had a total operating income of 220.72 billion yuan ($31.53 billion) in 2007, representing an increase of 45.6 percent from the previous year.

Earnings per share added 42.86 percent at 0.3 yuan and the directors proposed a final cash dividend of 0.065 yuan per share for the second half of 2007.

Bank chairman Guo Shuqing said the group made significant improvements in key indices as it carried on structural transformation of its business.

"We had remarkable growth where growth should be seen. We also had significant decreases where they should be seen, too," Guo told a press conference.

Net interest income increased by 37.3 percent to 192.8 billion yuan, whereas net fee and commission income surged 130.7 percent to 31.3 billion yuan, meaning that fee and commission were contributing a larger share of the operating income, he said.

"Our return on average equity advanced by 4.5 percentage points to 19.5 percent while the net interest margin rose 0.39 percentage points to 3.18 percent."

Non-performing loans (NPL) went down 0.69 percentage points to 2.6 percent, as the company recovered 24.3 billion yuan, wrote off 6.4 billion and started NPL securitization of 9.55 billion yuan, in part of its moves to strengthen risk management, said Zhang Jianguo, president of the bank.

Zhang said the bank enjoyed sound prospects thanks to ongoing transformation despite of challenges arising from both international and domestic uncertainties.

A possible slowdown in China's international trade growth, macroeconomic tightening and changes in the valuation of the yuan, will be the major challenges, he said.

Zhang said the bank is currently holding $0.98 billion in sub-prime mortgage-related MBS but it has already been covered by the bank's provisions.

The bank also said it was considering issuing yuan-denominated bonds in Hong Kong, saying that the time and amount would depend on the status of the market.

Guo said the bank aimed to accomplish its structural transformation by 2010, mainly by strengthening retail business, improve business and profit mix.

"Our key indicators has been catching up with leading international banking institutions but we are not putting ourselves among the group, because we know that we are still behind them in many respects and that we derive our strength from the rapid expansion of the Chinese economy," Guo said.