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RETAIL BANKING | Tony Chua, China

Bank of China profit up 28% to $10.4bn

The lender said its net interest margin has improved and has the potential to widen.

Bank of China, the nation's fourth-largest bank by market value, on Wednesday posted a higher-than-expected 28 percent rise in first-half net profit thanks to loan growth as well as hefty non-interest income from commissions and fees.

The results reflect attempts by Bank of China and its larger rivals to rely less on vanilla lending, which is under pressure as the government tightens availability of capital to tame inflation, and to boost revenue from businesses such as wealth management, investment banking and credit cards.

Net interest income and interest margin -- the bulk of Chinese banks' profits -- were both up.

"The net interest margin has improved, as has the potential to widen," Bank of China President Li Lihui said at a news conference.

The Chinese government has been trying for months to squeeze capital out of the financial system by increasing required capital reserves as well as raising interest rates.

The bank also said it has carried out an investigation into loans by local government financing vehicles, which are companies set up by city and provincial governments around the country to borrow money to fund infrastructure projects.

View the full story in Reuters.

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