Bank of Communications, one of the largest Chinese mainland-based commercial lenders, on Wednesday reported a net profit of 15.6 billion yuan (US$2.3 billion) for the six months ended June 30, up 0.3 percent.

This was better than the market estimates of declines, most of which were less than 1 percent.

The company declared an interim dividend of 0.1 yuan.

The net interest income totaled 29.8 billion yuan, representing a decline of 9.78 percent from the same period last year. But cumulative realized net fee and commission income rose 17.69 percent to 5.5 billion yuan, accounting for 14.76 percent of net operating income.

The company said it "moderately increased its loans disbursements while keeping risks within acceptable levels in support of the country's investment promotion policy," with loans increasing 30.15 percent, or 400.6 billion yuan in the first half to reach 1,729.2 billion yuan.

Net interest margin decreased by 5 basis points to 2.21 percent from the end of the first quarter, but net interest income began to increase compared with the first quarter after reporting two quarters of quarter-on-quarter declines.

This "signaled an upturn in the bank's net interest income," the report said.

The bank's impaired loans ratio decreased by 0.41 percent to 1. 51 percent from the beginning of the year and provision coverage of impaired loans was 123 percent.

The capital adequacy ratio declined slightly from beginning of the year to 12.57 percent, while core capital adequacy ratio declined to 8.81 percent.

The company said it expected a period of stability for the domestic economy in the second quarter, but nevertheless added that there remained uncertainties head. It said it would actively adapt to macro-economic changes and leverage on the opportunities arising from the Shanghai World Expo and the role of Shanghai as a key center.

(China Daily August 20, 2009)