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ICBC profit up 77%
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09:23, April 30, 2008

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Industrial and Commercial Bank of China Ltd (ICBC), the world's biggest bank by market value, said first-quarter profit rose 77 percent as companies borrowed more and fees from wealth management increased.

Net income climbed to 33.1 billion yuan, or 0.10 yuan per share, from 18.7 billion yuan, or 0.06 yuan per share a year earlier, the bank said in a stock exchange statement. ICBC cited unaudited figures compiled using international accounting standards.

ICBC increased corporate loans and services to China's growing ranks of wealthy people even as the government stepped up a campaign to slow credit growth. Chairman Jiang Jianqing has also made acquisitions in Indonesia, Macao and South Africa in the past year in a push to triple the share of profit coming from overseas.

"The company has been quite innovative, such as lending more to the corporate sector, which enjoys much higher returns," Dorris Chen, a Shanghai-based analyst at BNP Paribas, said before ICBC's announcement. ICBC has also been "quite aggressively retailing wealth management products".

Net interest income rose 36 percent to 66.3 billion yuan in the quarter from 48.1 billion yuan a year earlier. Net fee and commission income, such as fees from credit cards and mutual fund sales, was 12.1 billion yuan, from 6.5 billion yuan last year.

ICBC, with more customers than Russia's population, has said loan growth may slow to 10 percent this year from 12 percent in 2007. China's central bank raised interest rates six times last year and lifted the amount lenders must set aside as reserves to a record 16 percent this year.

Still, a 10 percent increase in lending remains "positive", Deutsche Bank AG's Hong Kong-based analyst Krista Yue said. ICBC's attempts to draw more corporate clients to its wealth management products also means it won't suffer a "significant decrease" in fee income, she said.

ICBC's income may rise by more than 40 percent this year, she said before the company's announcement yesterday. ICBC last month reported a 65 percent jump in 2007 profit, the fastest pace since it went through a government bailout three years ago.

The Hong Kong-traded shares have risen 10 percent this year, making the stock the best performer in the Hang Seng Finance Index. ICBC's Shanghai-traded shares have fallen 21 percent, less than the drop in the benchmark CSI 300 index.

ICBC held $1.22 billion of US subprime-related securities at the end of March. It wrote off $48 million on the investment in the first quarter, taking the total impairment to $448 million.

Source: China Daily/Agencies

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