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China CITIC Bank forecasts H1 profit to surge 150%

(Xinhua)
Updated: 2008-07-07 15:46

China CITIC Bank said Monday its net profit in the first half this year would surge 150 percent from 3.2 billion yuan ($457 million) in the same period last year.

"The company had a good business run in the first half, with the net interest income increasing remarkably, intermediary business revenues rapidly expanding and the effective income tax rate falling," said the bank in a statement to the Shanghai Stock Exchange on Monday.

It forecast its non-performing loan ratio would stay below 1.45 percent in the first half while the coverage ratio of provision for bad loans would be above 115 percent.

The bank's announcement followed those by China Merchants Bank, Shanghai Pudong Bank, the Industrial and Commercial Bank of China and Shenzhen Development Bank, which estimated first-half profits would gain more than 100 percent, 140 percent, 50 percent and 85-95 percent respectively.

Analyst Wang Yifeng from TX Investment Consulting said the whole banking sector would see a profit growth of 70 percent in the first half.

He attributed the gain to dramatic increases of the net interest income and commission fees for business such as bank card issuing, plus lower income tax rates.

"The driving force of banks' profit gains is weakening," said Wang, who told Securities Times that lending would be more expensive as there would be fewer interest rate hikes while time deposits were rising.

He predicted the profit growth of Chinese banks will slow to 50 percent in 2008 and 20 percent in 2009.