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RPT-Bank of China profit up 43 pct, beats forecasts

Thu Aug 28, 2008 5:01am EDT

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Stocks  |  Global Markets  |  China

HONG KONG, Aug 28 (Reuters)- Bank of China (3988.HK), the country's flagship foreign exchange lender, posted a forecast-beating 42.8 percent rise in first-half profit as wider interest margins helped offset its exposure to U.S. subprime-related holdings.

The state-run lender (601988.SS) said it held about $3.6 billion worth of U.S. subprime mortgage related debt securities at the end of June, and booked impairment allowance of $1.9 billion on those securities.

The bank also held U.S. Alt-A mortgage-backed securities of $1.8 billion and booked impairment allowance of $522 million for them.

Bank of China also held $10.6 billion of debt securities issued by troubled U.S. mortgage firms Freddie Mac (FRE.N) and Fannie Mac (FNM.N).

The Beijing-based lender, in which Royal Bank of Scotland (RBS.L) has a nearly 4.5 percent stake, recorded 42.18 billion yuan ($6.2 billion) net profit in the first half, compared with 29.5 billion yuan a year earlier.

On average, five analysts polled by Reuters were expecting a net profit of 40.8 billion yuan in the first half, with 19.1 billion yuan profit seen for the second quarter.

Bank of China's Hong Kong-listed shares have lost 12 percent this year, compared with a 24.6 percent slide in the benchmark Hang Seng Index .HSI. Its domestic A-shares were down 45 percent during the same period of time.

(US$1=HK$7.8=6.828 yuan)

(Reporting by Kennix Chim, editing by Tony Munroe)



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