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| CCB's Profits Take Dip in '05 on Rate Expiry |
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Despite robust loan and fee growth, China Construction Bank (CCB), the mainland's third-largest lender, yesterday posted a 4 percent drop in its net profit in 2005, due to the expiration of a low income-tax rate. CCB, which raised US$9 billion in a record Chinese initial public offering last October, is expected to post modest profit growth this year as it tries to enhance its residential mortgage and fee income businesses. The largest property lender on the Chinese mainland said yesterday that it earned 47.1 billion yuan (US$5.89 billion) over the 12 months ended December 31, compared to 49 billion yuan (US$6.1 billion) in 2004. The bank, which is 9 percent owned by Bank of America, said in its annual report that the loans balance experienced solid growth last year, jumping more than 10 percent to 2.458 billion yuan (US$307 million). Residential mortgage loans balance increased by 12 percent. The growth triggered a nearly 15 percent jump in net-interested income for the lender. Listed in Hong Kong as the first among the biggest four State-owned banks, CCB has been in the process of internal restructuring, and was granted a prime tax rate which ended on June 30, 2005. However, the lender said the regulator may continue to reduce or eliminate the income tax, which could barricade its growth in a long run. "If it is not this year, I hope it will be implemented soon, that the government could reduce or stop levying income tax," said CCB Chairman Guo Shuqing at a press conference. He said CCB optimised operating processes, enhanced service quality and increased investment technology development last year. "While maintaining advantages in our traditional business, we actively expanded our personal financial services, small and medium-sized enterprises financial services and fee and commission-based services, and we would continue to innovate our financial products and services," Guo said in a statement. Having issued 3.12 million credit cards by the end of last year, CCB became the second-largest bank-card issuer, with a market share of 18 percent. In 2005, consumption transaction volume of the credit cards reached 18.754 million yuan (US$2.34 million), a 184 percent year-on-year increase. With a market capitalization of US$106 billion, CCB is the world's eighth-largest bank by value, larger than lenders such as Royal Bank of Admitting that the group's development is still limited with lack of experience and shortage of talent, CCB nevertheless is striving to become a world-class commercial bank. "There is still a long way to go in terms of transformation into a world-class commercial bank, but our successful listing on the Stock Exchange of Hong Kong in October 2005 marked another milestone in our transformation," said Guo. The bank's results edged out a consensus forecast of 46.3 billion yuan (US$5.78 billion), according to 14 analysts polled by Reuters. CCB's Hong Kong-listed rival Bank of Communications posted a 477 percent increase in profit thanks to a tax rebate. (
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