China CITIC Bank, the seventh-largest bank in the country, joined other mainland lenders in posting favorable first-half results despite the government's monetary tightening policies.

The Beijing-based lender reported a 162 percent jump in net profits in the first half of this year to 8.42 billion yuan from 3.21 billion yuan a year earlier. The bank's revenue rose 70 percent to 20.25 billion yuan from 11.88 billion yuan.

Chen Xiaoxian, the bank's chief executive officer, said the good first-half results were due to a wider net interest margin and growth in its intermediary business.

"The operating results were outstanding and risk management and internal control were improved," he said yesterday.

The bank also disclosed that it had $1.18 billion in mortgage-backed securities issued by beleaguered US mortgage firms Freddie Mac and Fannie Mae at the end of June, as well as $403 million of corporate bonds issued by the two firms.

The lender said it had almost reached its deposit target of 905 billion yuan for the current year. "We, however, do not expect the deposit growth to remain at the same level as the first six months," said Chen, adding the increasing volatility in the financial market, competition and uncertainties in the country's monetary tightening policies will bring more challenges.

At the end of June, the bank's total deposits were up 7.9 percent to 849.46 billion yuan from 787.21 billion yuan at the end of 2007.

The bank's net interest margin, the measure of a bank's profitability, rose to 3.4 percent from 2.96 percent in the first-half of 2007, thanks to repeated interest rate hikes during the first six months. Chen said interbank lending, which recorded rapid growth, also helped increase its interest income.

The lender's non-interest rate income soared to 2.02 billion yuan from 623 million yuan in the previous year, mainly because of soaring earnings from bank cards, consulting fees and custodian businesses.

The Hong Kong-listed bank said its non-performing loan ratio fell to 1.45 percent from 1.48 percent at the start of the year, and its capital-adequacy ratio fell to 14.28 percent from 15.27 percent.

"We have been cautious in issuing loans to our customers, especially to industries not favored by government policies," Chen told reporters at a press conference yesterday.

Loans to real estate developers and "high energy consumption or high pollution" companies can only be granted by the bank's head office through restrictive procedures, the bank said.

Hong Kong shares in China CITIC Bank dropped 5.1 percent so far this year compared with a 24.7 percent slump in the benchmark Hang Seng Index.

Meanwhile, Shenzhen Development Bank, a Shenzhen-listed lender, posted a net profit of 2.14 billion yuan, up by 91 percent from the previous year.

Bank of Nanjing, a Shanghai-listed medium-sized bank said its revenue soared 126 percent to 788.3 million yuan.

(HK Edition 08/22/2008 page2)