China Construction Bank net profit jumps 31%

China Construction Bank said its first-half net profit jumped 31 percent thanks to higher interest rates and strong growth in fee-based businesses such as financial consulting and advisory services. The bank, in which Bank of America owns a 10 percent stake, earned 92.8 billion yuan ($14.5 billion) in the six months to the end of June, compared with 70.7 billion yuan a year earlier, the company said in a statement filed to the Shanghai Stock Exchange late Sunday. Net interest income, which accounts for more than 70 percent of its profit, grew 23.7 percent year-on-year in the first half to 145.7 billion yuan after the government hiked benchmark interest rates a number of times this year. Fee and commission income also surged 41.7 percent from the same period last year to 47.7 billion yuan. \"The group was actively engaged in service and product innovation which boosted the growth in the fee-based businesses. As a result, net fee and commission income rose substantially,\" the bank said. Shanghai-listed shares in China Construction Bank closed down 0.89 percent at 4.45 yuan in a weak market. Lending growth of Chinese banks has slowed since China introduced a slew of measures to rein in liquidity to fight inflation, which hit the highest level in three years at 6.5 percent in July. The central bank raised its benchmark interest rates twice in the first half of the year and the amount of money banks must keep in reserves with the central bank six times. China Construction Bank said its outstanding loans stood at 5.99 trillion yuan as of the end of June, up 8.3 percent from the end of December. That growth was slower than the 11.1 percent recorded in the first half of 2010. But net interest margin, a gauge of lending profitability, widened to 2.66 percent at the end of June from 2.41 percent the same time a year ago on the interest rates hikes, the bank said, offsetting the negative impact of slower growth in new loans. The bank\'s non-performing loan ratio stood at 1.03 percent at the end of June, lower than 1.14 percent at the end of December.