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HONG KONG/SHANGHAI, March 27 Industrial and Commercial Bank of China Ltd (ICBC) said on Thursday net profits rose a higher-than-expected 7.9 percent in the fourth quarter, buoyed by strong growth in interest income.
The profit growth was the slowest in a decade, but surprised analysts who had expected China's biggest bank, and its peers, to report even weaker growth as they boosted provisions in anticipation of more loan defaults.
ICBC said net profit rose to 57.1 billion yuan ($9.2 billion) in the fourth quarter from 52.9 billion yuan in the same year-ago period, higher than an average estimate of 52.5 billion yuan made by ten analysts polled by Thomson Reuters.
The bank, like other Hong-Kong listed lenders, benefited from resilient net interest margins despite the government's efforts to liberalise interest rates.
"Despite scary headlines about loan and WMP (wealth management product) defaults, the credit shock that has been widely anticipated for several years has yet to materialize," Jim Antos of Mizuho Securities Asia Ltd wrote in a research note issued ahead of the ICBC earnings.
For the whole of 2013, net profit rose to 262.7 billion yuan from 238.5 billion yuan a year earlier, ICBC said in its earnings statement.
Interest income increased by 8.7 percent in the fourth quarter to 116.0 billion yuan, while fees and commissions rose 1.7 percent to 26.8 billion yuan.
The bank's net interest margin was 2.57 percent at the end of 2013, the same as at the end of June.
ICBC's non-performing loan ratio inched up to 0.94 percent at end-December 2013, from 0.91 percent at end-September.
ICBC said it saw relatively large increases in the number of non-performing loans (NPLs) in the Yangtze river delta, the Pearl river delta and the Bohai Rim, as weak domestic and overseas demand pressured small and medium sized businesses in those export-oriented industrial regions.
The bank said it would increase total assets by 1.4 trillion yuan and liabilities by 1.3 trillion yuan in 2014, targeting a year-end NPL ratio within 1.2 percent.
ICBC is the third of China's four biggest banks to report annual earnings this week. The Agricultural Bank of China on Tuesday posted its slowest annual profit growth as a listed company, due to higher bad loan hedging.
Bank of China posted on Wednesday a surprise 11 percent increase in fourth-quarter net profits after it shrugged off concerns about rising bad loans and cut provisions
ICBC's shares closed down 0.2 percent in Hong Kong on Thursday, ahead of the results announcement. ($1 = 6.2094 Chinese Yuan) (Reporting by Gabriel Wildau, Lawrence White and Shanghai newsroom; Editing by Miral Fahmy)