Industrial and Commercial Bank of China Ltd, the world's biggest bank by market capitalisation, beat forecasts with a 61.6 percent jump in first-half profit, helped by widening interest margins and fee income growth.
Beijing has implemented a series of measures to tighten liquidity to cool a red-hot economy, but the impact on China's biggest banks has been limited because they benefit from rising interbank rates and have relatively low loan-to-deposit ratios. ICBC reported January-June earnings of 41.04 billion yuan (US$5.4 billion), compared with 25.4 billion yuan a year ago. On average, five analysts polled by Reuters had forecast earnings of 39 billion yuan.
The Beijing-based bank had already said its first-half net profit rose at least 50 percent due to increases in lending and non-interest income.
China's banks are some of the world's most expensive as investors buy them as a proxy for economic growth of more than 11 percent.
Last month ICBC overtook Citigroup as the world's biggest bank by market value and is worth more than US$280 billion. Citi is valued at around US$239 billion.
ICBC's Hong Kong shares trade at more than 23 times forecast earnings -- more than double Citi's forward PE of 10 times.
ICBC, in which Goldman Sachs, Allianz Group and American Express hold strategic stakes, said its first-half net interest income, derived from lending business, rose 33 percent to 102.2 billion yuan as Chinese firms borrowed heavily to fund expansion amid a booming economy.
The bank said its outstanding loans stood at 3,915.6 billion yuan, up 7.8 percent over the year of the previous year.
ICBC reported a 89 percent rise in net fee and commission income for January-June as it rolled out wealth management products to increasingly prosperous consumers. Fee income made up 12.7 percent of its operating income.
Net interest margin grew to 2.65 percent at end-June from 2.37 percent a year ago.
ICBC saw its non-performing loans decrease to 3.29 percent at the end of June, compared with 3.79 percent at the end last year. The lender aims to lower the ratio to below 3.5 percent this year.
China's central bank announced deposit and lending rate hikes on Tuesday, the fourth such move this year, reflecting continued efforts to curb excess liquidity.
Bank of Communications and China Merchants Bank, the country's fifth- and sixth-largest lenders, both cut their loan growth forecasts to comply with Beijing's effort to cool the economy.
In October, ICBC raised US$21.9 billion in an initial public offering in Hong Kong and Shanghai -- the world's largest IPO.
Its Hong Kong shares have since risen more than 59 percent through Wednesday, while its Shanghai-listed shares have more than doubled.