1288 HK: China’s Agricultural Bank Posts Profit Gain on Loan Margin. Agricultural Bank of China Ltd., the nation’s third-largest lender by market value, posted a 14 percent increase in first-quarter profit as it widened lending margins and boosted income from loans and fee-based services. Net income increased to 53.4 billion yuan ($8.5 billion) for the three months through March from 47 billion yuan a year earlier, the Beijing-based lender said in a filing to Hong Kong’s stock exchange yesterday. That compared with the 52.4 billion yuan median of eight estimates compiled by Bloomberg. “Overall, I would say it’s a decent set of results,” Ismael Pili, a Hong Kong-based analyst at Macquarie Group Ltd., said by phone yesterday. “Whether it’s capital, asset quality or liquidity, these guys seem to be ticking the boxes.” The bank also reported higher bad loans, underscoring the challenge posed to the nation’s largest lenders by China’s slowdown. The economy expanded 7.4 percent in the first quarter, the weakest pace in about 18 months, hurting borrowers’ ability to repay debt in a country that had its first onshore bond default last month. Shares of Agricultural Bank sank 1.2 percent in Hong Kong to HK$3.21 yesterday before the earnings were reported. The stock slumped 16 percent this year, compared with the benchmark Hang Seng Index’s 4.7 percent drop. Agricultural Bank’s first-quarter profit growth about matched the increase posted by Bank of China Ltd. (3988) on April 24. Loan Growth: Agricultural Bank’s net interest margin climbed 0.18 percentage point to 2.96 percent as of March from a year earlier, the lender said. Net interest income climbed 16 percent to 103.1 billion yuan, while net fee and commission income gained 3.4 percent. Total lending increased 4.5 percent from the end of 2013 to 7.6 trillion yuan as of March, with corporate loans accounting for 64 percent of the figure, Agricultural Bank said. Set up by Mao Zedong in 1951 to finance rural cooperatives, Agricultural Bank was the first commercial lender established in China under Communist rule. “Agricultural Bank’s strong rural network enabled it to achieve stable and cheap sources of funding,” Tang Yayun, a Shanghai-based analyst at Northeast Securities Co., said by phone. “That said, the asset quality remains a big concern as the economy is in a down cycle.”