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BEIJING/SHANGHAI, April 28 (Reuters) - China Construction
Bank Ltd (CCB) 601939.SS 0939.HK posted a 2.8% increase in
first-quarter profit as China's recovery from the COVID-19
pandemic accelerated and stoked demand for credit in the world's
second-largest economy.
Net profit rose to 83.1 billion yuan ($12.82 billion) in the
three months through March 31 from 80.9 billion a year earlier,
China's No. 2 lender by assets said in a filing on Wednesday.
CCB and other big state-run banks have benefited as economic
activity recovers in China from the coronavirus pandemic.
Lending still makes up the bulk of their earnings, compared to
their western peers, many of which have formidable investment
banking and securities trading businesses.
That meant the Chinese lenders were not able to reap the
trading bonanza derived by Wall Street banks in the first
quarter, though they avoided costly missteps, like the big
exposures to the failed Archegos fund, that their U.S. and
European peers had.
But the Chinese banks have begun to pull back on their
lending, amid Beijing's worries about exuberance in some sectors
such as property.
Xiao Yuanqi, vice chairman of the China Banking and
Insurance Regulatory Commission (CBIRC), warned banks should be
prepared in advance for pressures from a rebound of bad loans as
adjustments to domestic and global supply chains are expected to
cause some defaults.
China's banking industry recorded a 1.5% year-on-year profit
growth in the first quarter, while the bad loan ratio dropped to
1.89% from 1.92% at the end of 2020, CBIRC said earlier in the
month.
CCB's non-performing loan (NPL) ratio was 1.56% at the end
of March, flat from three months earlier.
Total bad loans increased to 274.3 million yuan from 260.7
million yuan at the end of 2020.
The bank's net interest margin, a key measure of
profitability, declined to 2.13% at the end of March from 2.19%
at the end of 2020. The fall was "mainly due to the steady
progress of interest rate liberalisation, changes in product
structure, and fierce competition for deposits", said the bank.
($1 = 6.4841 Chinese yuan renminbi)