China Merchants Bank Co, China's sixth-largest lender, said net profits in 2005 rose by 25 percent over the previous year, on the strength of its expanding retail banking and off-balance sheet activities.

 

Net income at China's largest publicly traded lender on the Chinese mainland rose to 3.9 billion yuan (US$487 million) or 0.38 yuan (5 US cents) per share in 2005, based on domestic auditing, the Shenzhen-based bank said in an exchange filing yesterday.

 

The company plans to pay a dividend of 0.80 yuan (10 US cents) per every 10 shares.

 

Revenue from principle operations rose to 28.4 billion yuan (US$3.5 billion) in 2005.

 

Revenue generated from off-balance sheet activities rose by more than half to 2.4 billion yuan (US$300 million), accounting for 8.46 percent of the principle operation revenue.

 

The bank is to maintain development momentum of off-balance sheet activities this year and further increase their proportion in revenue income, the bank said in the filing to the Shanghai Stock Exchange, where it is listed.

 

Off-balance sheet activities involve trading financial instruments and generating income from fees and loan sales, as opposed to commercial banks' traditional operations, which involve booking loans, taking deposits and generating profit from the interest rate difference.

 

Among all the bank's off-balance sheet business in the past year, revenue from credit card issuance grew by 104 percent over the previous year, to 410 million yuan (US$51 million).

 

About 2.34 million credit cards were issued in the past year, bringing the total number of the bank's cards to more than 5 million.

 

At the same time, the retail banking business saw rapid growth as well.

 

The bank's personal savings deposit grew by 29.06 percent in 2005, to 243.5 billion yuan (US$30.4 billion), accounting for 38 percent of the total deposit, while personal loans grew by 19.2 billion yuan (US$2.4 billion), the highest rise among all Chinese joint-stock banks.

 

"The earnings are within consensus forecast and therefore offer nothing unexpected," said Yu Xiaoyi, a Guangfa Securities analyst.

 

"The earnings benefited from good management with a clear strategy aimed at improving asset structure and striking balanced growth among all business operations," said Yu.

 

(China Daily April 13, 2006)