Bank of China Ltd, the country’s leading lender in terms of assets, has reported that their first half of the year profit has moved up by 28% to a record high due to loans and fee incomes put together. Net income was up to 66.5 billion yuan or $10.4 billion compared to 52 billion yuan from the year before.
The financial institution has also showed that there was a decrease in bad debt while boosting default provisions as China has become very strict when it comes to the requirements on property loans and credit to local government units. The stock was the second worst performer compared to the other large lenders this year due to anxiety over credit growth that may put the country at default.
According to James Liu from CIMB-GK Securities Research, “Bank of China is under more pressure to make provisions as it expanded its loan book much faster than its peers. The banks have also disappointed shareholders by limiting dividend payouts as they focus on capital requirements and credit quality.”
The total number of loans of Bank of China has moved up by 72% in the last two years which is outpacing the 49% credit growth of other competitors such as Industrial & Commercial Bank of China Ltd and China Construction Bank Corp.
The bank loans in China have increased by 9.8% in the first six months of the year to 6.2 trillion yuan from 5.66 trillion yuan by the end of year 2010.
Tags: credit quality, Industrial & Commercial Bank of China, total number, Industrial and Commercial Bank of China, Bank of China Ltd
