China Construction Bank Q4 profit up to $3bln

Careful choice of projects last year can make performance this year better than peers.

China Construction Bank Corp., the nation’s second-largest lender, more than doubled profit in the fourth quarter as bad loans declined and lending surged amid a recovery in the world’s fastest-growing major economy.
Net income climbed to 20.7 billion yuan ($3.03 billion) from 8.37 billion yuan ($1.23 billion) in the fourth quarter of 2008, based on figures released by the Beijing-based company last Mar 28.

China’s economic growth accelerated to 10.7 percent in the fourth quarter and property prices climbed the most in almost two years last month, buoyed by record lending. Construction Bank, established in 1954 to fund roads, railways, bridges and dams, poured money into projects around the nation after the government unleashed a $585 billion stimulus package.

“Last year’s lending growth was phenomenal, but it also left us with a lot of side effects,” said Fu Lichun, a Beijing- based analyst at Southwest Securities Co. “Asset quality is the biggest risk lying ahead. China Construction Bank may do better than peers because it was more selective in choosing projects last year.”

View the full story in Business Week.