Bank of China said Tuesday its 2007 net profit rose 31.3 percent over the previous year despite the biggest exposure to the U.S. mortgage credit crisis among Asian lenders.
Net profit reached 56.3 billion yuan (7.9 billion U.S. dollars)under international accounting standards, up from 42.8 billion yuan in 2006, the state-owned lender said in a statement on its website. Per-share earnings rose to 0.22 yuan from 0.18 yuan in 2006.
Net interest income grew by 25.9 percent from a year earlier to152.7 billion yuan, it said.
The bank had made an impairment allowance of 1.3 billion U.S. dollars for its 4.99 billion U.S. dollars in investment in securities linked to U.S. subprime mortgages by the end of last year.
The exposure, down from 7.95 billion U.S. dollars in September last year, accounted for only 2.13 percent of the bank's total securities investment. The Industrial and Commercial Bank of China, the nation's number one lender, reported a 1.23-billion-U.S. dollar exposure to the mortgage crisis.
"As the U.S. credit market has deteriorated since the beginning of 2008, the Bank of China will further strengthen its monitoring and management of bond investment to bring risks under effective control," it said.
By the end of 2007, the bank's outstanding loans expanded 17.2 percent to 2.85 trillion yuan, while the deposit balance rose 7.6 percent to 4.4 trillion yuan. Its non-performing loan ratio stood at 3.12 percent.
The bank had 5.99 trillion yuan in total assets by the end of 2007, up 12.5 percent from a year earlier. It was the world's fourth largest bank by market capitalization, at 197.8 billion U.S. dollars.
"The Bank of China will accelerate the development of overseas business, seek opportunities for more acquisitions and strengthen its diversified financial services," said the bank's board chairman Xiao Gang.
The nation's most international bank currently derives nearly 40 percent of its net profit from overseas operations, according to the bank data. It has 669 outlets in 28 countries and regions.
"One of our key markets overseas is Europe, where the economy is well developed and the financial market is mature," vice president of the bank Zhang Yanling said last year.
Commercial banking, investment banking, insurance and investments were major contributors to overseas profits, she said.
In July 2006, the Bank of China became the first state-owned Chinese bank to launch initial public offerings in Shanghai and in Hong Kong. The Royal Bank of Scotland holds a 10-percent stake in the bank.