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Interest-bearing asset gains and an innovation-driven boom in customer accounts contributed to a 3.81 percent increase in 1H 2017 net profit for China Construction Bank Corp. (CCB), a pillar of the Chinese economy and one of the world’s biggest banks.
In a Hong Kong Stock Exchange filing August 30, CCB said its net profit rose to more than 139 billion yuan (US$ 21.07 billion), up nearly 6 billion yuan from 1H 2016.
Contributing factors included a 3.25 percent jump in net interest income to almost 217.8 billion yuan, and a 3.85 percent increase in personal customer deposits to 7.19 trillion yuan. Other major revenue sources — including corporate, treasury, and overseas businesses — also posted healthy gains.
CCB reported strong performance despite a challenging business environment and slowing growth in China, where risks such as local government debt are weighing on Beijing’s “supply-side” balancing effort and financial system reforms. Moreover, Chinese banks are contending with stricter regulations and competition from internet-based finance companies.
CCB is meeting challenges by focusing on the nation’s expanding consumer sector through payment and settlement services, private banking, and consumer finance. Personal and mortgage lending as well as debit and credit card issuances have significantly increased.
The bank’s assets under custody and syndicated loan business grew rapidly in the first half, sparking a 5.8 percent increase in commissions on trust and fiduciary activities to 6.6 billion yuan. On the other hand, consultancy and advisory fees fell nearly 10 percent to 6.5 billion yuan to meet new government standards aimed at supporting the Main Street economy.
CCB has responded to internet financing rivals by rolling out online-based consumer and business services that apply big data and internet technologies. Small businesses are now supported by an online financing service called Rapid Loan for Small and Micro Businesses, while the new Yunongtong platform provides micro-credit services to small businesses throughout rural China.
Income from electronic banking services jumped 41 percent to 6.4 billion yuan in the six-month period, CCB said, as the bank “spared no effort in building an internet-based financial ecosystem, fueling a rapid increase in the number of customers and the volume of transactions.”
Another consumer growth area is wealth management products. CCB said WMP-related fees in the first half increased 9.3 percent to 12.3 billion yuan after the bank launched differentiated products to meet the needs of various customers.
Total customer deposits rose 5.6 percent in the Jan. 1–June 30 period, to 16.27 trillion yuan, including a 6.6 percent increase in corporate deposits. Deposits from overseas operations and subsidiaries led all other groups, soaring 16 percent to 74.8 billion yuan.
Underscoring a commitment to overseas growth, CCB recently expanded operations in Indonesia, Malaysia, Australia, and Europe. CCB Indonesia was inaugurated in February. Another new unit is CCB Malaysia. And new branches recently opened in Warsaw, Poland, and Perth, Australia. At the end of June, the bank had 251 overseas institutions in 29 countries and regions.
To counter corporate debt risk, CCB said it has optimized credit policies, improved customer criteria and enhanced its credit structure. As a result, infrastructure sector loan quality has stabilized despite a higher loan balance. CCB’s non-performing loan ratio for manufacturers was stable in the first half, while NPLs decreased in the wholesale, retail, and real estate industries.
In the second half of the year, CCB plans to boost profitability after closely analyzing the market and customer needs. The goal is to identify and take advantage of new business development opportunities. The bank has also pledged to strengthen product innovation, enhance comprehensive service capabilities, and work toward stable fee and commission growth.