China's AgBank says real estate loan risk manageable

BEIJING/HONG KONG: Agricultural Bank of China Ltd, the country's third-biggest lender, said on Monday, Aug 30 that its level of real estate loans were the lowest among its peers and its yearly profit could exceed forecasts.

Risks from loans to real estate developers and from mortgages was manageable for the bank, Chairman Xiang Junbo said at a briefing to discuss its results for the first half of 2010.

Xiang also said Agbank's profit growth will be faster in the second half than the first half and its yearly profit for 2010 is expected to exceed forecasts, he added.

AgBank, which was listed in Hong Kong and Shanghai in July, forecast a 2010 net profit of at least 82.9 billion yuan (RM38.25 billion), up 28% from the previous year and is targeting a core capital adequacy ratio of 8.5% for 2010 to 2012, the bank said in its listing document.

It reported on Friday a 40% rise on first-half profit to 45.8 billion yuan, boosted by a borrowing binge and lower credit costs. The net came in slightly below the average forecast of 47.1 billion yuan in a Reuters survey of three analysts.

Shares of Agbank eased 1.1% at HK$3.5 in Hong Kong on Monday morning, lagging a 0.95% rise in the broader market as of 0237 GMT.

AgBank had 1.17 trillion yuan ($172 billion) in outstanding real estate loans at the end of June and its non-performing loan ratio for real estate lending stood at 1.29% at the end of June.

The bank clarified that it had not stopped real estate lending but noted that such loans were being halted for a week from Aug 24 to avoid what is considered excessive growth toward the end of the month.

Real estate lending will return to normal from Sept 1, president Zhang Yun said.

Beijing has taken steps to rein the country's real estate market amid concern that rapidly rising home prices were causing the economy to overheat, and other banks have reportedly cut back or halted lending to the property sector. -- Reuters