CCB profit growth slows on mounting bad loans

Has had to pay more to attract deposits.

China Construction Bank Corporation, one of China’s Big Four state-owned banks, said its Q3 net income rose 9.4% to US$9.3 billion.

Net income growth slowed to the weakest pace in six quarters as CCB set aside more for soured debt while tougher competition drove the bank to pay savers more for deposits.

This came even as CCB boosted profit due China’s economic recovery driven by demand for loans and fee-based services such as investment accounts.

CCB earmarked US$1.5 billion of new provisions against soured debt in Q3 compared to US$1.36 billion on-year. Its non-performing loans rose to US$13.5 billion as of Sept. 30 from US$13.2 billion three months earlier.

Analysts said CCB’s results showed that other Chinese banks will likely see profit growth slowing. Chinese banks are unlikely to report the strong earnings gains seen in the past few years since the recent credit boom has created bad loan issues that are now appearing and damaging profits.

Total third-quarter profit at the nine Chinese banks traded in Hong Kong may grow by 11%, Deutsche Bank AG estimated.