(Adds bank's plan to issue CNY30 billion worth of bonds.)
SHANGHAI (MarketWatch) -- Medium-sized lender Shanghai Pudong Development Bank Co. (600000.SH) said Sunday its first-half net profit rose 34% from a year earlier due to rapid growth in its interest income and fee-based intermediary businesses.
The bank, in which Citigroup Inc. /zigman2/quotes/207741460/composite C +0.58% owns a 3.4% stake, also said it intends to sell CNY30 billion (US$4.4 billion) worth of bonds by the end of next year to replenish its capital base, which was weakened by aggressive expansion and a government-directed lending binge last year.
Shanghai Pudong Development Bank said its net profit for the six months ended June 30 was CNY9.08 billion, up from CNY6.78 billion a year earlier.
The earnings growth dwarfed that of bigger rivals such as Industrial & Commercial Bank of China Ltd., which said Thursday its first-half net profit rose 27% from a year earlier, because medium-sized banks can charge the small and medium-sized companies that make up their client base higher interest rates on loans than big banks charge their customers.
The Shanghai-based bank said its net interest income, which accounted for nearly 90% of its operating revenue, rose 34% to CNY20.33 billion from CNY15.13 billion a year earlier, while net fee and commission income from intermediary businesses such as credit cards and asset management surged 70% to CNY1.82 billion.
However, the bank's rapid expansion in recent years put pressure on its capital base. As of June 30, its capital-adequacy ratio was 10.24%, down slightly from 10.34% at the end of 2009 and marginally above the minimum 10% required for China's medium-sized banks with a national presence.
Besides the planned bond issue, Shanghai Pudong Development Bank also plans to raise CNY40 billion by selling a 20% stake to China Mobile Ltd. (CHL) to boost its capital base. The private placement of shares in the world's largest cellular-phone operator is still under review by China's banking, securities regulators as well as state-asset supervisors.