Agricultural Bank of China Ltd., which raised a record $22.1 billion in an initial public offering last month, said Friday its first-half net profit soared 40%, to $6.74 billion from $4.8 billion a year earlier, driven by robust growth in its rural financial business.
China's third-largest bank by assets flagged the robust earnings growth on July 13, two days before it listed on the Shanghai Stock Exchange, with the hope for a solid debut. However, it gained 0.75% at the close of its first day of trading.
Though Agricultural Bank has emphasized to investors that it would benefit from the government's support measures for rural areas, investors remain concerned over the health of its loan book because of its exposure to poor farmers.
Agricultural Bank's share price has fared poorly despite a recovery in China's stock market. One of the worst-performing stock indexes globally in the first half, the Shanghai Composite Index is up nearly 10% since bottoming out in early July.
Friday in Shanghai, the shares ended at 40 cents, up from the listing price of 39 cents, but below the peak of 42 cents on July 29.
Agricultural Bank, which derives a third of its revenue from rural regions, said it issued $35.4 billion of new loans to China's county-level rural districts in the January to June period, increasing such loans by 18% from the end of last year.
The robust growth helped boost Agricultural Bank's overall net interest income by 33%, to $16.4 billion in the first half from $12.31 billion a year earlier.
Agricultural Bank reported a 32% surge in net fee and commission income, to $3.3 billion as it said its extensive network put it in a stronger position to expand intermediary businesses such as wealth management products and insurance policies.
The bank, which was founded in 1949, had more than 23,000 outlets at the end of 2009, covering every city in the country, according to its IPO prospectus.
Agricultural Bank said its capital-adequacy ratio was 8.31% at the end of June, down from 10.07% at the end of 2009 and well below the minimum regulatory level of 11.50% required for China's big state-run banks.
Its nonperforming loan ratio fell to 2.32% from 2.91% over the same period, still the highest among China's Big Four state banks.
