Agricultural Bank of China, the country's third-largest lender, said operating profit surged 35 percent in the first nine months of the year as an expanding economy boosted income from interest and fee-based services.

 

Operating profit rose 11 billion yuan (US$1.4 billion) to 42.6 billion yuan (US$5.4 billion), the Beijing-based lender said in a statement yesterday.

 

Agricultural Bank of China extended 286.2 billion yuan (US$36.2 billion) of new loans in the nine months ended on September 30, 43 percent more than the amount advanced in the same period a year earlier.

 

Chinese banks lent 2.76 trillion yuan (US$349 billion) of new loans in the first nine months, 40 percent more than the previous year, even as the government tried to cool the fastest economic expansion in a decade.

 

Bank lending fuelled a surge in investment that the People's Bank of China, the central bank, said could add too much manufacturing capacity, leading to falling prices and possibly cause bad loans to rise.

 

Fee income from intermediary services at Agricultural Bank of China rose 34 percent to 8.9 billion yuan (US$1.1 billion) in the same period, the lender said.

 

The bank, which has the worst asset quality among the nation's four State-owned lenders, said its bad-loan ratio dropped 2.68 percentage points in the first nine months. Up to 26.2 percent of the lender's loans were categorized as "bad" as at the end of December last year.

 

(China Daily November 2, 2006)