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Bank of China posts lower-than-expected Q1 profit

(Agencies)
Updated: 2009-04-28 18:55

Bank of China reported a 14.4 percent drop in first-quarter profit on Tuesday, hit by lower fees and exposure to declining import and export markets.

The results show that earnings growth for China's major State-run banks is slowing, though steady lending has allowed the group to remain in the black. Bank of China reported results a day after rival Industrial and Commercial Bank of China posted a better-than-expected rise in profit of 6.2 percent. Bank of China reported first-quarter profit of 18.57 billion yuan ($2.72 billion), compared with earnings of 21.7 billion yuan in the year-earlier period.

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The lender, hardest-hit among the country's big banks by subprime securities, is also exposed to the import/export sector through its foreign exchange business.

Fees and commissions from international settlement, agency business and foreign exchange transactions fell during the quarter, the company said, driven in part by the decline in imports and exports.

Loans and advances to customers rose 15.5 percent to 3.8 trillion yuan, as the government has mandated that the State-controled banks keep lending to boost the economy.

Bank of China said as of March 31, the carrying value of US subprime mortgage-related debt securities held was $2.21 billion, representing 0.84 percent of the investment securities at the bank. The bank said it recorded a fair value change of 1.64 billion yuan.

The company's shares are up 31 percent since the beginning of the year. Shares of Industrial and Commercial Bank of China Ltd are little changed this year, as is the benchmark Hang Seng Index.

Bank of China's first-quarter net interest income fell 9.74 percent to 36.84 billion yuan, while net fee and commission fell 4.7 percent to 11.3 billion yuan.