China Construction Bank eyes faster loan growth
BEIJING/HONG KONG (Reuters) - China Construction Bank , the country's second-largest lender by assets, said on Monday it expects local currency lending to grow 10 percent this year, implying stepped up activity in the second half, but warned of slowing profit growth.
Construction Bank, which on Friday posted a 71 percent jump in first-half net income to 58.7 billion yuan ($8.6 billion), said growth in lending would be driven in part by loans to small and medium-sized enterprises and agricultural businesses.
Many smaller businesses have suffered from a lack of access to capital as Beijing curbed loan growth in order to stave off economic overheating. A slowdown in key export markets such as the United States, and soaring commodity prices, have also taken their toll.
Construction Bank, which is about 11 percent owned by Bank of America, saw domestic currency lending rise 7.6 percent in the first half.
"Corporate input costs are rising fast as global energy and resource prices keep increasing," President Zhang Jianguo told reporters in Beijing.
"China's industrial policies are changing, labor costs are rising. Many bank clients are facing various new challenges."
Flush times for Chinese banks, fuelled by double-digit economic growth, are expected to be coming to an end as funding costs rise and asset quality comes under pressure.
Higher fee income and margins powered Construction Bank's surge in first-half earnings, which were in line with forecasts.
Full-year net profit is expected to increase 50 percent, based on analyst forecasts compiled by Reuters Estimates. Growth is expected to slow to 17 percent in 2009, Reuters Estimates data shows.
"We think that in these two years, the first-half profit growth was the peak. It is impossible to match that growth this year or next," Chief Financial Officer Pang Xiusheng told reporters in Hong Kong.
Shares in Construction Bank jumped 3.7 percent in Hong Kong on Monday to close at HK$6.19 amid a broad market rebound that saw the Hang Seng Index rise 3.5 percent.
(US$=6.8434)
(Writing by Tony Munroe, editing by Ian Geoghegan)
(tony.munroe@reuters.com; Reuters Messaging: tony.munroe.reuters.com@reuters.net; +852 2843 6358, Fax +852 2845 0636))
