THE Bank of Communications(Stock Code: 601328)' profit rose 31 percent in the first quarter amid growth on loans and fee-based income.

Net profit increased to 3.8 billion yuan (US$497 million), or 0.08 yuan a share, from 2.9 billion yuan, or 0.06 yuan, a share a year ago, the Shanghai-based lender said in a briefing yesterday, citing unaudited figures on international accounting standards.

Net interest income grew 25.16 percent to 11 billion yuan. Fee-based income, including selling policies and wealth-management products, surged 94.52 percent to 1.21 billion yuan.

"The bank's profit rose in the first quarter amid the country's growing economy and a bigger demand for financial products," said Qiu Zhicheng, a Haitong Securities Co analyst.

The bank, 19.9 percent owned by HSBC Holdings Plc, is grabbing more market share in consumer lending with HSBC's expertise and its own network of 2,600 outlets nationwide to develop fee-based services, including credit cards and cash management.

The lender is also planning a foray into the private banking sector, Dicky Yip, executive vice president of BoCom said yesterday.

The bank has already set up a high-end wealth-management facility which targets client with assets of more than 500,000 yuan.

The bank entered the credit-card sector in July 2005 and had issued 2.19 million cards at the end of March, 254,000 of them this year.

The bank's outstanding loans grew 10.27 percent from the beginning of the year to 1.02 trillion yuan, while deposits increased 6.65 percent to 1.51 trillion yuan in the same period.

Its capital adequacy ratio, a core measure of strength, was at 12.57 percent at the end of March from 10.83 percent in December, exceeding the eight percent regulatory minimum. The ratio increased to above 15 percent after the A-share offering.

The excess capital may give BoCom the flexibility to grow through acquisitions.