August 23, 2010 (Chinavestor) China Construction Bank (HKG:0939), the world's second-largest bank, said its second-quarter profit jumped 20% to 35.6 billion yuan from 29.55 billion yuan a year earlier as China's growing economy helped the bank beat analysts' average estimate of a profit of $34.3 billion. Shares of China Construction (HKG:0939) trade at 2.25 times book value, down from about 3.4 times in May 2008, according to data compiled by Bloomberg.
Chinese banks have reported strong profits despite concerns that a government crackdown on real estate loans would crimp profit growth. The government has required Chinese banks to boost capital reserves and made downpayment requirements more strict in the hopes of preventing a real estate bubble.
China Construction (HKG:0939) said bad loans declined to 65.17 billion yuan by the end of the second quarter. The bank has 5.2 trillion yuan in outstanding loans. The bank is hoping to have a 75 billion yuan rights offering, Asia's largest, finalized by October, Bloomberg reported. The bank's first-half profit was 70.7 billion yuan.
Chinese regulators now require the country's largest banks ot carry a capital adequacy ratio of 11.5%, but China Construction's (HKG:0939) is above that threshold at 11.68%. Separately, the bank said it received approval to open a branch in Toronto, a noteworthy tidbit given that Canada's banking market is typically difficult for foreign competitors to enter.