By staff reporter Fang Huilei and intern reporter Feng Zhe

(Caijing.com.cn) China's four largest listed banks are expected to see their first-half net profit reduced by narrower net interest margins and higher loan-loss provision requirements, despite having extended record loans over the period, analysts surveyed by Caijing said.

Commercial banks loaned 7.4 trillion yuan in the first six months, and the scale of lending could moderate profit declines for some of these banks, analysts said.

An official at Central Huijin Investment Co. Ltd., the controlling shareholder of Industrial and Commercial Bank of China (SSE:601398, HKEX:1398), China Construction Bank Corp. (SSE:601939, HKEX:0939) and Bank of China (SSE:601988, HKEX:3988), told Caijing the investment firm was satisfied with the three lenders' first-half net profits.

Bank of China booked first-quarter net profit of 18.57 billion yuan, down 14.41 percent year-on-year, while China Construction Bank's net profit fell 18.2 percent to 26.3 billion yuan. Bank of Communications Co. Ltd. (SSE: 601328, HKEX: 3328) booked growth of just 0.8 percent in first-quarter net profit to 7.9 billion yuan.

Bucking the trend, ICBC recorded a 6.2 percent rise in net profit to 35.1 billion yuan, supported by one-time forex gains and bond disposals.

Commercial banks had a combined provision coverage ratio of 134.3 percent at the end of June, up 17.9 percentage points from the beginning of the year, according to the China Banking Regulatory Commission.

The regulator has ordered banks to meet a new minimum provision coverage ratio of 150 percent within the year.

The increased provision coverage ratio will put added pressure on lenders, which will have to allocate some of their net profit to these provisions, an insider from a large bank's risk management department said.

Bank of Communications is scheduled to release its interim report on Aug. 19, ICBC on Aug. 20, China Construction Bank on Aug. 21 and Bank of China on Aug. 27.
1 yuan = 14 U.S. cents

Full article in Chinese: http://www.caijing.com.cn/2009-08-18/110226631.html