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Bank of China says profits up sharply in 1999

BEIJING: The Bank of China, the country's main foreign exchange bank, said on Tuesday its profits rose sharply last year due to internal reforms and the Asian economic recovery.

The state-owned Bank of China made pre-tax profits of 11.482 billion yuan ($1.38 billion) in 1999 compared with 8.52 billion yuan in 1998, a bank spokesman told Reuters.

That represents a year-on-year increase of 35 percent.

The official Xinhua news agency reported the profit on Monday but did not clarify whether the earnings wwere pre-or post-tax and did not give comparative figures.

"Several major reasons could be attributed to the improved performance last year," said the bank spokesman.

"Firstly, this showed the efforts in reforming the internal structure have started yielding results," he said.

"We have developed new markets. Meanwhile, the Asian economic crisis has eased, which is also an important factor," the spokeaman said.

The bank's 1998 profits were down 38 percent from the previous year due to the impact of the Asian economic crisis, according to its 1998 annual report.

The Bank of China had completed merging provincial and city branches nationwide and had moved to close some country-level branches, a bank statement quoted bank chief Wang Xuebing as saying.

DEEPER REFORMS EYED IN 2000

The bank would continue its structural reforms this year and strengthen internal control mechanisms to limit risks, Wang was quoted as saying.

"The reform will be deepened this year. The bank's management should be strengthened greatly with strict discipline," he said.

The bank's assets rose 4.2 percent at the end of 1999 from the end of 1998, when they stood at 2.7997 trillion yuan, the bank said.

At the end of 1999, outstanding local currency loans stood at 731.4 billion yuan, up 12.46 percent from a year earlier, it said.

The loans were used mainly to finance infrastructure projects in transport and telecommunications and high-tech industries, it said.

DEBT-EQUITY SWAPS IMPROVE BOOKS

The spokesman said the bank's asset quality would show "an improvement" as more bad loans were being transferred to the China Dongfang Asset Management Corp.

Dongfang, the debt-clearing firm set up last year to tackle the Bank of China's bad loans, had signed 19 billion yuan in debt-for-equity swap agreements, the bank said.

Dongfang is one of four asset management companies China set up to take over bad debts at its big four state-owned commercial banks.

Modelled on the US Resolution Trust Corp, the four companies have said debt-for-equity swaps would be the main means of recovering bad loans and cutting the burden on state firms.-Reuters