UPDATE 1-China Construction Bank posts 10.7% profit fall, biggest since 2005

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BEIJING/SHANGHAI, Aug 30 (Reuters) - China Construction Bank Corp (CCB) , the country’s second-largest lender by assets, on Sunday posted a 10.7% fall in first-half profit, the biggest January-June decline since its market debut in 2005.

Net profit fell to 137.6 billion yuan ($20.04 billion) from 154.19 billion yuan for the same period a year earlier, the lender’s filing to the Shanghai Stock Exchange showed.

That implies a net profit of 56.8 billion yuan for the second quarter, down 26.5% from 77.27 billion yuan a year earlier, the biggest quarterly fall since the fourth quarter of 2008, Reuters calculations show.

The results highlight the impact of the pandemic and the slowing local economy on Chinese banks after they bucked the global trend in the first quarter by posting higher profits and steady bad loans.

CCB’s nonperforming loan ratio was 1.49% at the end of June versus 1.42% at the end of March.

Bad loans at the bank totalled 245.5 billion yuan at end-June, up from 226 billion yuan at end-March.

Its net interest margin, a key measure of profitability, was 2.14% at end-June, down from 2.19% three months prior.

China’s top banking watchdog has asked state lenders to fully recognise bad loans on their balance sheets and increase their buffers for covering souring debt in the first half, weighing on their profits.

Chinese commercial banks overall posted a 9.4% drop in first-half net profit to 1 trillion yuan, according to data from the China Banking and Insurance Regulatory Commission.

By the end of the June quarter, the average nonperforming loan ratio for commercial banks was at 1.94%, commission data showed, the highest since 2009. ($1 = 6.8647 Chinese yuan renminbi) (Reporting by Zhang Yan and Cheng Leng in Beijing,and Engen Tham in Shanghai; Editing by Himani Sarkar, Sam Holmes and William Mallard)