BANK of China Ltd. (BOC) yesterday reported slowing profit growth and said it could see more loans go bad in the second half of the year as export-focused regions suffer.

    The bank posted an 8.3 percent rise in its second-quarter net profit to 44.3 billion yuan (US$7.21 billion), according to a calculation from company figures.

    That was in line with analysts’ expectations, but continued the trend of slowing profit growth for Chinese lenders as the costs of dealing with worsening asset quality increase.

    BOC, the country’s fourth-largest lender by market value, posted growth of 17 percent in the second quarter of 2013.

    The bank’s nonperforming loan ratio increased slightly to 1.02 percent at the end of June, compared with 0.98 percent at the end of March, pushing it above the 1 percent maximum level that the Chinese banking regulator has said is healthy.

    A slowing economy has raised investor concerns about bad loans in the banking sector.

    “Credit assets will face great pressure in the second half of the year,” said Zhang Jinliang, vice president of BOC.

    In the first half of the year, 27 billion yuan was spent on dealing with nonperforming assets, Zhang said.

    The bank’s new bad loans are concentrated in manufacturing, wholesale businesses and the steel industry, Zhang said, and are largely in export-orientated areas, such as Zhejiang, Shandong and Guangdong provinces.

    In response to rising bad loans, banks have cut off lending to riskier borrowers, tightened lending terms and, in one case, deployed teams of investigators to assess the risk of loan defaults.

    Domestic lenders have also accelerated writing off bad assets, clearing away soured loans that had in the past lingered on their books.

    (SD-Agencies)