China’s lending boom lifts ICBC - Profits rise at world’s biggest bank

China’s lending boom lifts ICBC - Profits rise at world’s biggest bank
By Jamil Anderlini in Beijing
Copyright The Financial Times Limited 2009
Published: August 20 2009 10:39 | Last updated: August 20 2009 13:13
http://www.ft.com/cms/s/0/5d4f2f6c-8d6d-11de-93df-00144feabdc0.html


Industrial and Commercial Bank of China, the world’s largest bank by market value, posted a 3 per cent rise in net profit in the first half from a year earlier amid an unprecedented expansion in Chinese bank lending.

But the increase came on the back of a 17.2 per cent jump in ICBC’s total assets as China’s state-controlled banks rushed to extend loans to infrastructure and industrial projects to help boost flagging growth.

Chinese banks lent Rmb7,370bn ($1,100bn) of local-currency loans in the first half of the year, a figure equivalent to 45 per cent of half-year gross domestic product, according to BNP Paribas, which said it knew of no other economy that had created credit on such a scale since second world war.

ICBC’s net profit in the first half was Rmb66.42bn, an impressive figure when measured against many of its global peers, which have struggled to post positive earnings in recent months.

The earnings showed a significant deterioration in profit margins, which analysts say affected all Chinese banks as they lent almost triple the amount extended in the same period a year earlier.

ICBC said its loans grew by 19 per cent or Rmb864.5bn in the first half, roughly equal to the annual gross domestic product of New Zealand, but its annualised return on average total assets fell to 1.26 per cent, from 1.44 per cent a year earlier.