China Construction Bank , the world's No.2 lender valued at $193 billion, joined smaller rival AgBank in reporting earnings lower than the market had expected as China's slowing growth squeezes its top lenders.
October-December net profit rose 23 percent to 30.25 billion yuan ($4.8 billion), according to Reuters calculations from full-year numbers. Full-year profit was up 25 percent at 169.3 billion yuan, just shy of a mean estimate for 170 billion yuan from 25 analysts surveyed by Thomson Reuters I/B/E/S. CCB, which has Singapore state investor Temasek as a stakeholder, said loan-loss provisions rose by a fifth last year, higher than its 14.5 percent annual loan growth.
The higher bad loan costs highlight growing concern that non-performing loans at China's banks are likely to increase as growth in the economy slows. Premier Wen Jiabao this month forecast sub-8 percent GDP growth for the first time in eight years. "In 2012, the global economic environment is expected to become more severe and China's economic development faces numerous challenges," CCB said in a statement late on Sunday.
"With the influence of weak global economic recovery and domestic economic restructuring, China's economic growth momentum will slow." CCB said its impairment losses - charges taken to write down assets with a previously overstated valuation - rose 22 percent to 35.8 billion yuan last year.
Credit quality at CCB, China's largest mortgage lender, also worsened, with its non-performing loan (NPL) ratio rising to 1.09 percent at the year-end from 1.02 percent at end-September.
Yuan-denominated loans are expected to grow by about 12 percent this year, CCB said, slower than last year's 14 percent increase. This month, the four big state-backed banks said they would lend more to qualified property developers to boost entry level housing supply, a signal they are ready to ratchet up property lending.