Better loan performance sees ICBC profit rise 14.9pc

Industrial and Commercial Bank of China (ICBC), the world's largest bank by assets, has posted a forecast-beating 14.9 per cent rise in third-quarter earnings.

The gains came from higher profit margins on its loans and a reduction in its provisions for bad loans.

ICBC was the third of the big four mainland banks to report better-than-expected profits, joining Bank of China and Agricultural Bank of China. The fourth, China Construction Bank, reported third-quarter profit growth in line with market estimates.

"Larger lenders in the mainland are better weathering the impact of cuts in interest rates and interest-rate liberalisation," said Chen Xingyu, an analyst with Phillip Securities in Shanghai. Chen said the strong results showed the monopoly position of the big four meant they could get better returns on loans, which ensured growth in net interest margins.

The net interest margin is the spread between what a bank earns from lending and its cost of funds.

The mainland's fifth-largest lender, Bank of Communications, reported an 11.7 per cent rise in third-quarter earnings to 13.43 billion yuan from a year ago.

Earnings at ICBC were 62.44 billion yuan in the three months to September, up from 54.36 billion yuan a year ago and exceeding the 60.7 billion yuan average estimate of 12 analysts surveyed by Bloomberg.