China Construction Bank eyes issue of 20b yuan of subordinate debt

China Construction Bank plans to issue 20 billion yuan (HK$25.2 billion) of subordinate debt on the mainland and is studying the feasibility of issuing preference shares to boost capital.

"As our assets continue to grow, and keeping in mind the impact of the economic slowdown, we have to consider all possible ways to maintain our capital strength," said chairman Wang Hongzhang in Hong Kong yesterday after the bank posted a net profit of 215.1 billion yuan for last year, an increase of 11.1 per cent from the previous year.

With the slowdown in the domestic market and the liberalisation of interest rates and other reforms in the financial sector, mainland banks are expected to report slower growth and increased bad loans as a result of the credit squeeze.

Niu Ximing, chairman of Bank of Communications, the mainland's fifth-largest lender by assets, said he believes banks are staring at an era of single-digit earnings growth, after the quantum profit jumps of past years.

But Wang said the profit growth of mainland lenders would depend on the economy and loan demand from companies.

"It is difficult at this moment to say whether profits will grow at single or double digits this year," he said, adding that he expects the mainland's gross domestic product this year to grow by 7.7 per cent like last year.