* Q3 net profit 62.44 bln yuan vs 59.9 bln yuan view
* Q3 NPL ratio at 0.87 pct vs 0.89 pct in end-June
* Q3 interest income up 16 pct to 107 bln yuan
HONG KONG, Oct 30 Industrial and Commercial Bank
of China Ltd (ICBC), the world's biggest bank,
reported a 15 percent rise in quarterly net profit, beating
estimates, as interest margins widened due to increased demand
Net profit rose to 62.44 billion yuan ($10 billion) in
July-September from 54.4 billion yuan a year earlier, ICBC
said on Tuesday. That compares with an average
estimate of 59.9 billion yuan in a Reuters poll of 12 analysts.
ICBC, the last of the so-called "Big Four" Chinese banks to
post third-quarter earnings, joined rivals Bank of China Ltd
, China Construction Bank Corp and
Agricultural Bank of China Ltd in reporting
The July-September period marked the first full quarter
since the central bank allowed lenders to set their own loan
rates in a landmark move to liberalise the country's interest
The central bank in June allowed banks to set loan rates up
to 20 percent above its benchmark rate, and in July raised the
ceiling to 30 percent.
ICBC said its net interest margin, which measures loan
profitability, widened from 2.66 percent in the first half of
2011, but did not elaborate.
Net interest income, the amount a bank charges for loans
minus what it pays for them, rose 16 percent from a year ago to
107.3 billion yuan.
Shares in ICBC have risen 9 percent in Hong Kong trading so
far this year, lagging a 19 percent rise in the benchmark Hang
Analysts warn that the two central bank rate cuts since June
that brought the benchmark rate down to 6 percent from 6.56
percent may still to weigh on banks' profitability in the fourth
"A lot of people were surprised at how strong net interest
margins have held up for the banks," said Mike Werner, an
analyst at Sanford Bernstein. "People thought pricing power
would evaporate, but that's definitely not the case."
The central bank has lowered interest rates to help
jumpstart the world's second-biggest economy, which has seen
growth slow for seven consecutive quarters.
Worries about a spike in bad loans have also restrained
analysts' estimates of future earnings and sapped the
performance of Chinese banks this year.
In 2008-2009, local governments set up special purpose
vehicles to borrow heavily from banks to fund infrastructure
projects across China and stimulate the country's economic
growth. Now, analysts are fretting about loan defaults if the
Loans to once-favoured industries such as solar energy and
steel have also come under pressure.
ICBC's overall non-performing loan balance fell to 74.8
billion yuan from 75.1 billion yuan at the end of June. Its
non-performing loan ratio dropped to 0.87 percent from 0.89
The bank said it put aside 5.7 billion yuan as provisions
against potential bad loans, a quarter lower than a year ago.
That brought its non-performing loan coverage ratio up to 288
percent of total outstanding bad loans.
Bank of China and AgBank both set
aside less provisions than a year earlier, helping to propel
bottom-line earnings past market expectations. AgBank cut its
provision charge by a fifth, while Bank of China cut its charge
by 16 percent.
"The Chinese banks' perspective is that they have met their
regulatory requirement, so there's no need to save anymore,"
said Jim Antos, an analyst at Mizuho Securities in Hong Kong.
"If faced with an economic slowdown, many Western banks would
have provisioned more and downgraded earnings."
China's banks tower over most of its global peers in size,
with ICBC's market value alone roughly equivalent to that of JP
Morgan, Goldman Sachs and Bank of America Corp
(Reporting by Kelvin Soh; Editing by Ryan Woo)