BANK of China Ltd, the nation's second largest, said first-quarter profit rose 18 percent on higher demand for loans and more fees from selling financial products in the world's fastest-growing major economy.
Net income jumped to 11.7 billion yuan (US$1.5 billion), or 0.05 yuan a share, from 10 billion yuan, or 0.05 yuan a share, a year earlier, the Beijing-based bank said in a statement to the Hong Kong Stock Exchange yesterday.
Profit from fees and commissions rose by almost two-thirds as Chinese banks reaped more money from selling products such as mutual funds, with the nation's stock benchmark surging 70 percent this year. Also bank loans in China grew an average 6.2 percent in the first quarter, spurred by an economy that expanded a faster-than-expected 11.1 percent, Bloomberg News said.
"China's large banks in general look quite alike and rely mainly on net interest income for revenue," said Wu Yonggang, a Shanghai-based banking analyst at Guotai Jun'an Securities Co. "What sets Bank of China apart is that fee-based income contributes a bigger share of its revenue because of its more diversified business." Besides commercial banking, BOC has investment banking and insurance operations.
The bank last year sold a combined 14.1 percent stake through share sales of US$11 billion in Hong Kong and US$2.6 billion in Shanghai. Issuing new stock contributed to flat earnings per share in its unaudited first-quarter results, which were based on international accounting standards.
BOC's Shanghai shares have surged 82.5 percent since they began trading on July 5, making the company the world's sixth largest bank with a market value of US$167.6 billion, according to data compiled by Bloomberg. Citigroup Inc is first and Industrial & Commercial Bank of China Ltd, the nation's largest, is third.
BOC said net interest income in the first quarter rose 31 percent to 34.4 billion yuan from a year earlier. The increase stemmed from a wider net interest margin and more interest-earning assets, the statement said, without providing further details.
Net fee and commission income grew 64 percent to 5.2 billion yuan on expanding operations in fund distribution, bank cards, settling and clearing trades and credit guarantees and syndicated loans, the statement said. Assets under management in China's mutual fund industry soared 33 percent to 1.14 trillion yuan in the first quarter, according to Shanghai-based Z-Ben Advisors Ltd.
BOC, which derived almost half of its profit from international operations last year, booked a trading loss of 735 million yuan against a 1.1 billion yuan profit a year earlier on the appreciation of the Chinese yuan against major foreign currencies.