August 23, 2010
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News: China Construction Bank Soars
Few areas of the globe, if any, have escaped difficulties in economic stability and growth during the credit card, real estate market, and financial industry crisis. Recently, China has begun to feel some of the same pains that the U.S., U.K., and other countries have experienced as their economies begin a slow turn upward. However, one Chinese bank has dodged the bullets as it reports a significant profit increase. China's State-owned bank, the China Construction Bank Ltd., recently reported a 27 percent increase in profits. While the credit card industry continues to pull itself up out of the clutches of high delinquencies and defaults, during the first and second quarters 2010, profits soared for China Construction to 70.8 billion yuan or $10.4 billion U.S., up from the 55.8 billion yuan from the same time last year. According to its report, China's third largest commercial lender noted that the increase was mainly due to an increase in credit card interest and fees.
As the bank continues its focus on financial management and consultation services, China Construction Bank reported that its profit increase was due to a 44 percent jump in loan fees and commission business to 33.6 billion yuan or $4.9 billion U.S.; a 60.4 percent increase in credit card fees; and, loan interest income with a 15 percent increase to 117.8 billion yuan or $17.3 billion U.S. The bank also noted that its aggressive marketing of credit cards has complemented its other business services.
According to the bank's Vice Chairman and President, Zhang Jianguo, Construction Bank was able to avoid most of the economic difficulties with construction funding by the state companies during stimulus financed spending. However, there is concern spreading throughout the country that some of these stimulus loans will be defaulted which could the bank in a difficult situation. In an effort to avoid the backlash, China Construction Bank has tightened up its commercial credit card and loan funding to reduce risk. The bank is based in Beijing and is second largest bank in the world by market capitalization.