Bank of China Q1 net profit down 14.41% on writedowns for toxic assets

BEIJING, April 28 (Xinhua) -- Bank of China, the country's third largest lender by market value, said Tuesday its first-quarter net profit fell 14.41 percent from a year ago on writedowns of sub-prime-related assets.

Net profit in the first three months stood at 18.57 billion yuan (2.73 billion U.S. dollars), or 0.07 yuan per share, down from 21.7 billion yuan, or 0.09 yuan, a year earlier.

The bank wrote down the value of sub-prime-related assets and other securities by 378 million U.S. dollars in the first three months, bringing the funds set aside for toxic assets up to 4.84 billion U.S. dollars, the bank said in its first-quarter report.

The bank still held 2.2 billion U.S. dollars in U.S. sub-prime-mortgage investments, 1.05 billion U.S. dollars in securities backed by Alt-A home loans, 3.2 billion U.S. dollars of "non-agency" mortgage investments and 3.4 billion U.S. dollars of Freddie Mac and Fannie Mae securities, as of March 31.

Non-agency mortgage refers to mortgage-backed securities not issued by government sponsored enterprises (GSEs) such as Freddie Mac and Fannie Mae.

The lender's domestic institutions extended 569.4 billion yuan of yuan-denominated new loans in the first quarter, up 24 percent from the end of last year, as the country's banks have been instructed to make more loans in a bid to stimulate the slowing economy.

Yuan-denominated customer deposits increased 18 percent from the end of last year to 723.1 billion yuan in the first quarter, it said.

However, the bank's income from interest declined 9.74 percent from a year ago to 36.84 billion yuan in the first three months.

The bank said it adjusted its holding of foreign currency-denominated assets down by 6 percentage points to 29 percent of the total in the first quarter.

The non-performing loan ratio was 2.24 percent at the end of March, 0.41 percentage points lower than the end of last year, with outstanding non-performing loans at 85.13 billion yuan.

The bank's shares closed at 2.76 HK dollars in Hong Kong Tuesday, unchanged from the previous close. Shares in Shanghai edged up 0.29 percent to 3.47 yuan. Trading in Shanghai ended before the lender's first-quarter results were announced.