HONG KONGâ€" The Bank of China, the first of the country's major state-owned lenders to report earnings for the third quarter, said Thursday that profit for the period rose a robust 16.6 percent from a year earlier, beating analysts' expectations.
Fresh signs that the world's second-biggest economy after the United States may have turned a corner have stimulated demand for new loans in recent months, and analysts are forecasting that China's biggest banks will report healthy growth in earnings for the July to September quarter over the coming days.
Bank of China, the smallest of China's so-called Big Four lenders by assets - the other three are the Industrial and Commercial Bank of China, China Construction Bank and Agricultural Bank of China - saw third-quarter net income rise to 34.76 billion renminbi, or $5.57 billion, against analysts' forecasts for profit of 33 billion renminbi.
The result marked a rebound from the second quarter, when the bank re ported a year-on-year profit increase of just 5.2 percent, its slowest growth in quarterly profit in three years.
New lending drove the increase in earnings. For the quarter, the Bank of China expanded total assets by 7.7 percent from a year ago to 12.74 trillion renminbi, or $2.04 trillion. The result was a 14.5 percent rise in net interest income, to 65.4 billion renminbi.
Wary of signs that Beijing may be moving to partly deregulate the nation's fixed-interest rate regime, which guarantees a comfortable margin for banks between their lending and deposit rates, many Chinese banks have in recent years been seeking to reduce their reliance on their loan business by tapping other sources of income.
However, Bank of China appeared to head in the opposite direction during the third quarter, with net interest income driving results while earnings from transaction fees and commissions lagged.
Fee and commission income fell 1.1 percent from a year ago t o 15.68 billion renminbi, the bank said. By contrast, the rise in net interest income coincided with the increasing profitability of the lending business. Bank of China's net interest margin widened to 2.12 percent at the end of September, up slightly from 2.1 percent at the end of June, after regulators this summer moved to partly loosen lending and deposit rates.
