China Construction Bank (CCB) said its revenue won't be affected by the US subprime crisis as it has only a small amount of US mortgage-backed securities.

CCB, one of the Big Four State-controlled banks, held $1.06 billion worth of US mortgage-backed and related bonds at the end of June, accounting for 2.75 percent of its total investment in foreign exchange bonds, it said in its interim report yesterday.

"CCB did have a loss from the investment if calculated at the current market value of the securities," said Zhang Jianguo, president of the bank. "But the loss is not significant enough to seriously affect revenue and is well within CCB's capacity to bear."

Zhang said the bank held $460 million in US subprime mortgage-backed bonds, accounting for less than half of its total investment of $1.062 billion in US mortgage-backed and related bonds.

He said the US securities it held had high credit ratings of A or above and more than 80 percent were rated AAA.

Analysts said the high ratings of its securities exposed the bank to low risk from the credit crisis.

CCB, which posted a 47.5 percent increase in net profit for the first half, said yesterday it had set aside $180 million for potential losses.

Its net profit rose to 34.25 billion yuan for the January-June period, up 11.03 billion yuan on the same period last year, the bank said yesterday.

"If the US subprime mortgage market situation becomes more serious in the future, CCB will consider increasing the capital in provision," Zhang said.

A meltdown in the US subprime mortgage market triggered a global credit squeeze that has roiled markets over the past few weeks.

The Industrial and Commercial Bank of China said its subprime mortgage-backed and related securities were valued at $1.23 billion by the end of June, accounting for 0.3 percent of its total securities investment and 4.32 percent of its foreign exchange investment portfolio.

(China Daily August 28 2007)