CHINA Construction Bank Corp. (CCB) , the country’s second-biggest lender by assets, reported a 6.6 percent rise in third-quarter net profit yesterday, as its bad loan ratio dipped and interest margins stabilized.

CCB is the first of China’s five major lenders to report third-quarter earnings and its financial results bode well for the others. Chinese banks have seen stabilizing margins and increased lending this year, helped by the central bank’s successive reductions in bank reserve requirement ratios.

Net profit rose to 67.08 billion yuan (US$9.7 billion) in the three months to Sept. 30 from 62.9 billion yuan a year earlier, the bank said.

That was slightly below the forecast of three analysts surveyed for a 6.9 percent increase.

The government has been pumping funds into the banking system, rolling out support measures for local businesses and seeking to boost confidence in the falling Chinese stock market as the outlook for the world’s second-biggest economy has been threatened by the escalating Sino-U.S. trade war.

But some analysts worry that unrestrained, credit-fuelled growth could worsen a build-up in bad loans in the longer term, undermining the government’s push to reduce riskier lending and a mountain of debt.

On its part, CCB has accelerated bad loan disposals and heeded the government’s call to conduct debt-to-equity swaps to lower corporate leverage and fend off systemic financial risks, leading to a slower build-up of nonperforming loans at the bank.

CCB’s nonperforming loan ratio dropped slightly to 1.47 percent at the end of the quarter, from 1.48 percent at the end of June.

Its net interest margin, a key measure of profitability, stood at 2.34 percent at the end of September, unchanged from three months earlier. (SD-Agencies)