China Construction Bank (CCB), the country's second-largest lender by assets, said yesterday that its profits and lending business will remain sound this year, despite the nations' monetary tightening policy.

"Our business repositioning has already started. The loans will grow at the same rate this year and the government's policy won't have much of an impact on CCB's profit growth," bank Chairman Guo Shuqing said at a press conference for its 2007 annual results.

China Construction Bank is restructuring its business, according to Chairman Guo Shuqing. The lender's net profits jumped nearly 50 percent last year. AP

He also said that CCB's outstanding loans rose by 13.9 percent to 3.18 trillion last year.

Given that the mainland's CPI surged 8.7 percent year-on-year in February and the forecast for March was high, Guo said the nation's macro-control efforts will be further strengthened.

However, the State-controlled lender, which is 8.5 percent-owned by Bank of America, has already worked out strategies to diversify its business to increase the contribution from non-interest sectors; its capability to fight against the risk will be further improved, Guo said.

The bank, which plans to finish its business restructuring by 2010 and become a world-leading bank by 2020, reported net profits of 69.1 billion yuan for 2007, up 49.3 percent from a year earlier.

By comparison, its larger rival, Industrial & Commercial Bank of China, reported a 65.5 percent increase in 2007 profits. And Bank of China, the country's flagship foreign-exchange lender, posted a 31 percent rise in 2007 earnings.

Although the central government issued stringent mortgage policies for housing buyers last year to cool down the overheating real estate markets, the personal housing mortgage business of CCB continues to lead the industry, as it recorded an increase of 23.3 percent to 528 billion yuan last year.

CCB's net-interest income, mainly driven by lending, rose 37 percent for the year to 192.8 billion yuan, while net-fee and commission income jumped 130 percent to 31.3 billion yuan.

Its net-interest margin widened to 3.07 percent for the year, compared with 2.69 percent a year earlier, despite the central government's moves to increase interest rates several times last year to curb excess liquidity.

The bank said it held US subprime mortgage-backed securities (MBS) worth $1 billion at the end of 2007, and it had booked a $630 million impairment loss for the year on its subprime-related holdings.

CCB plans to issue renminbi bonds in Hong Kong, but the time and scale will be decided by the market, said President Zhang Jianguo.

Shares in CCB have gained 1.7 percent this year, outperforming an 11.3 percent slide in the benchmark Hang Seng Index over the same period.

(HK Edition 04/12/2008 page2)