China Construction Bank’s first-half net profit rose 3.4% on year

 

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China Construction Bank (0939) saw a moderate rise in interim net profit though net interest income and mortgages were hurt by lower interest rates in China. No interim dividend was declared.

For the first half of the year, CCB – one of the biggest state-owned lenders in the mainland – saw its net profit rise 3.4% from a year earlier to 167 billion yuan, thanks to net non-interest income, which grew 5.21 percent to 76 billion yuan.

Credit impairment losses narrowed by 7.63 percent yearly to 95.4 billion yuan.

Notably, the residential mortgages decreased by 72.9 billion yuan, or 1.13 percent, to 6.41 trillion yuan, as more homebuyers made prepayments after the mortgage-related interest rate was lowered in a bid to boost the sluggish property market.

The net interest income, however, shrank 1.73 percent yearly to 312 billion yuan, with the net interest margin dipping by 30 basis points to 1.79 percent within one year.

Chinese major lenders reduced their deposit interest rates to below 3 percent this year, hurting the interest income of the banks, after the authorities attempted to boost the economy that was losing momentum in the second quarter.

And the state-owned China Securities Journal reported that Chinese commercial banks may further lower deposit interest rates.