China Construction Bank boosts profit but growth slows

PROFITS at China Construction Bank (CCB) rose by a fifth in the second quarter as the world’s second-biggest lender by market value seeks to raise 75bn yuan (£7.1bn) to fuel growth.

Profit growth at CCB, China’s biggest lender to home buyers and construction projects, beat market expectations, but slowed from a rise of more than a third in the last quarter.

China has stepped up efforts in recent months to curb property and infrastructure lending, conducted stress tests on mortgage loans and increased scrutiny over banks’ loan books. This has triggered investor concerns over banks’ asset quality after a lending binge last year.

CCB, which is 11 per cent owned by Bank of America, said it earned a net profit of 35.6bn yuan (£3.38bn) during the April-June period, compared with 29.6bn yuan a year earlier.

The results beat the expectations of seven analysts polled by Reuters, who forecast on average that CCB’s quarterly profit would rise 16 per cent to 34.3bn yuan.

In the first half, CCB’s profit rose 27 per cent. That compares with a 60 per cent jump at China Merchants Bank and a doubling in earnings at newly-listed Everbright Bank.

“The growth is higher than I expected,” said Jin Lin, analyst at Orient Securities in Shanghai. “Loan expansion will be the main driver of profit growth for banks in the future.”

CCB plans to sell 75bn yuan (£7.1bn) worth of shares in Shanghai and Hong Kong as early as the fourth quarter to replenish capital.