Monday April 27, 10:30 AM
UPDATE 1-China's ICBC Q1 profits beat expectations
HONG KONG, April 27 (Reuters) - Industrial and Commercial Bank of China, the world's biggest bank by market value, on Monday posted a 6.1 percent increase in first-quarter profit due to higher fees and commission income.
Though the rate of earnings growth across China's banking sector is shrinking, the major banks have announced profits so far in the quarter, despite an economic slowdown throughout the region.
The government-backed lender was expected to post an earnings decline of about 1 percent to 31.6 billion yuan, based on the average forecast of analysts at UBS (Virt-X: UBSN.VX - news) and Macquarie.
ICBC (0349.HK - news) said January-March earnings rose to 35.15 billion yuan ($5.15 billion) from 33.1 billion yuan ($4.85 billion) in the year-earlier period.
The results topped those of rival China Construction Bank , the world's second-largest bank, which on Friday said quarterly profit fell 18.3 percent.
U.S. bank Goldman Sachs (NYSE: GS - news) , credit card company American Express (NYSE: AXP - news) and German insurer Allianz Group own more than 7 percent of the company, combined.
Analysts expect the major shareholders to sell all or part of their stakes after lock-up periods expire on Tuesday.
Net interest income fell 12.9 percent to 57.7 billion yuan on narrowing net interest margins. But net fee and commission income rose 9.7 percent to 13.5 billion yuan.
The company's non-performing loan ratio stood at 1.97 percent, a decrease of 0.32 percentage point compared with a year earlier. Total assets rose 12.5 percent to 11 trillion yuan ($1,612 billion).
Total loans and advances to customers rose 13.9 percent to 5.2 trillion yuan.
The aggregate nominal value of subprime-related debt securities was $1.8 billion, representing 0.11 percent of the bank's total assets.
ICBC's Hong Kong shares are trading almost exactly where they were at the start of the year. The stock fell 5.9 percent on Monday in anticipation of the shareholder selldown.
ICBC's Hong Kong shares have traded in line with the benchmark Hang Seng Index so far this year. Both fell sharply at the beginning of the year and rallied since mid-March on hopes that the Chinese and global economies were nearing a bottom.
Earlier this month, ICBC said it did its part to boost growth by granting 647.5 billion ($94.81 billion) in new yuan loans in the quarter. The new loans exceeded the 536.7 billion yuan lent in all of 2008, Chairman Jiang Jianqing told Reuters.
Jiang also said at the time of the April 16 interview that the bank's non-performing loan (NPL) level and ratio to total loans fell at the end of the first quarter and that he was confident the new lending would not result in higher NPL levels.
(Editing by Chris Lewis) ($1=6.824 Yuan) Keywords: ICBC RESULTS/
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