BEIJING (AP) — China Construction Bank Ltd., one of China's "big four" state-owned commercial lenders, said Monday profit growth slowed in the latest quarter as the economy cooled.
Profit for the three months ended Sept. 30 rose 9.4 percent to 56.8 billion yuan ($9 billion), the Beijing-based lender said. That was down from 12.3 percent growth for the first nine months of the year. Revenue rose 10.4 percent to 126.6 billion yuan ($20 billion).
China's state-owned banks are among the world's most profitable but earnings growth has slowed as rapid economic expansion cools. Banks also are preparing for a possible rise in loan defaults following a flood of credit in response to the 2008 global crisis.
Economic growth edged up to 7.8 percent in the latest quarter from the previous quarter's two-decade low of 7.5 percent, but that is barely half of 14.2 percent in 2009. Analysts say the recovery might weaken later in the year.
Chinese banks also face a squeeze on profits as the Communist Party gradually introduces market forces into lending. That could push down lending rates and force banks to pay more for deposits, narrowing their current margins of about 3 percent, which are among the world's widest.
Until recently, the state-owned banking industry lent mostly to state industry and forced depositors to subsidize borrowers by holding down rates paid on savings accounts. Reformers want to open up that system to make more credit available to entrepreneurs. Forcing banks to compete for deposits would shift more money to Chinese consumers.
Ruling party leaders are due to meet in November to try to produce a new long-term economic development blueprint. Economists and business groups say state-dominated financial industries are among the most likely candidates for changes.
Construction Bank is the first of the major Chinese banks to report results for the latest quarter.
Net interest, which accounted for 78 percent of total income, rose 8.2 percent to 98.8 billion yuan ($15.8 billion). That growth was down from 9.7 percent in the first nine months of the year.
In July, regulators announced an end to controls on lending rates, which would allow borrowers with stronger credit records to shop around for cheaper loans. That would cut their costs but would squeeze bank profits.
Chinese regulators also have promised other changes in banking, including possibly allowing privately owned lenders, but the ruling party has yet to decide on the timing and scope of reforms.
China Construction bank said its assets were 15 trillion yuan ($2.4 trillion) as of Sept. 30, up 7.3 percent from the end of last year.
China Construction Bank Ltd.: www.ccb.com