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Last Updated: Thursday, 23 August 2007, 11:37 GMT 12:37 UK
China banks witness profit surge
Teller counting yuan notes
Rising interest rates have allowed banks to up their charges
Half-year profits at two of China's biggest banks have surged on the back of higher lending and rising fees.

Industrial & Commercial Bank of China (ICBC), China's biggest bank, said net profits for the six months to June rose 62% to 41.04bn yuan ($5.4bn; 2.7bn)

Meanwhile, Bank of China revealed net income rose 52% from the same period last year to 29.5bn yuan.

Higher lending and a rise in fee-based income drove the increase, the country's fourth-biggest lender said.

Banks have been boosted by recent interest rate rises in the country, which have allowed them to increase the fees they charge for loans.

On Tuesday, the central bank raised its benchmark lending rate for the fourth time this year to 7.02% from 6.84% in an effort to keep inflation in check and stop the world's fourth-largest economy from overheating.

Rates benefit

At Bank of China net fee and commission income rose to 17.6bn yuan from 14.7bn yuan.

Meanwhile, income from fees and commission surged 89% to 14.9bn yuan at ICBC.

ICBC also announced it planned to spend 2bn yuan on improving its branch network and "wealth management" centres.

The move comes just months after foreign banks, such as HSBC, were allowed to offer services such as deposits and mortgages to private banking customers.

Meanwhile, as well as increased competition, ICBC and its peers have been battling against critics that have attacked poor customer service and weak risk management.

In an effort to shake off the criticism ICBC said it was expanding its loans to individuals and small firms while also taking steps to control loans to unprofitable industries.

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