China Merchants Bank Co (stock code: 600036) revealed yesterday that it holds no investments backed by United States subprime loans.

The bank sold its asset-backed and mortgage-backed securities last August after a 13.4 percent return on the investments, President Ma Weihua said at a press conference in Hong Kong yesterday.

Ma also said profit growth in the second half may slacken because of the government's measures to rein in lending and a possible slowdown in the stock market, Bloomberg News reported. Shenzhen-based Merchants Bank posted a 120 percent gain in first-half profit on loan growth and fee income from sales of mutual funds as China's shares soared.

China Merchants can learn from the US subprime crisis, Ma said. Defaults on US subprime loans are rising after a five year housing boom when lenders gave mortgages to borrowers with poor or limited credit histories, asking for little or no money down and requiring limited or no documentation about their incomes and financial obligations.

"The US's subprime problem should serve as a warning to us because China's property market is also very heated, so we need to be stricter when approving mortgage loans," he said.

The European Central Bank, the US Federal Reserve and other central banks injected billions into money markets last Thursday and Friday amid concern that US subprime mortgage losses will curtail lending.