Lender says it will issue preferred shares when rules are promulgated

Agricultural Bank of China Ltd, the country's largest rural lender by assets, said net profit rose 14.5 percent in 2013.

The State-owned bank reported profit of 166.21 billion yuan ($27.02 billion) for the 12 months to Dec 31, from 145.13 billion yuan in 2012. Profit growth was the slowest since 2006 as the government sought to contain excessive credit supply and industrial capacity amid slower economic growth.

The bank reined in bad loans, stepped up collections and increased write-offs. At an earnings briefing on Tuesday, it voiced concerns about a slight increase in bad loans, especially from manufacturing and Yangtze River Delta steel enterprises.

Nonperforming loans increased nearly 20 billion yuan from 2012, to 87.8 billion yuan. The nonperforming loan ratio fell to 1.22 percent at the end of December from 1.33 percent in the previous year, partly due to asset sales.

The bank sold 4.1 billion yuan worth of bad loans in 2013, said Song Xianping, the bank's director of risk management.

"We felt pressure from nonperforming loans in the economic downturn," Song said. "Our nonperforming loans will increase slightly this year, but the risk in general will remain controllable."

Agricultural Bank will explore new ways to replenish capital for long-term development, said Li Zhenjiang, executive vice-president of the bank.

China's securities regulator last week unveiled rules for a pilot program allowing banks and other listed firms to issue preferred shares. Li said his bank plans to issue preferred shares and is waiting for more detailed rules from regulators before proceeding.

Like many other commercial banks, Agricultural Bank faces greater competition from Internet companies that are expanding into financial services.

"We hold a respectful and welcome attitude toward Internet finance and hope an environment for fair market competition will be created by having each participant regulated by corresponding rules," Li said.

He noted that Internet finance redefined banks' service channels, service and data systems, but also extended certain risks - especially those stemming from lack of liquidity.

Agricultural Bank of China, along with the three other largest State-owned commercial banks, recently imposed transaction ceilings on instant transfer via third-party payment tools.

"We lowered the cap on instant transfer to protect the safety of our clients' funds. Many thefts occurred during our cooperation with a large number of third-party payment service providers," Li said.

He said the bank will still cooperate with major third-party payment companies and emphasized the safety of clients' personal information and funds.

jiangxueqing@chinadaily.com.cn