China Construction Bank, one of the country's largest state-owned banks, said yesterday its pre-tax profit rose 34.01 percent last year compared with 2003.

Pre-tax profit, audited by the international accounting firm KPMG, stood at 50.2 billion yuan (US$6 billion) in 2004.

By the end of last year, the bank's non-performing loans dropped to 3.92 percent, while its capital adequacy ratio increased to 11.29 percent.

Spokesman Fan Yifei claimed the bank's major business indicators had been close to the medium or higher levels of the world's top 100 banks.

The bank, which won a US$22.5 billion capital injection from the State in late 2003, was picked by the government as a pilot to turn it into a joint stock firm.

Last September, the bank established a joint stock listing vehicle named China Construction Bank Corporation, following the split-up of the institution into two parts.

The joint stock firm, with a registered capital of 194.23 billion yuan (US$23.4 billion), has five founding shareholders - the Central Huijin Investment Co, Baosteel Iron and Steel Co Ltd, State Grid Corp, Yangtze Power and China Construction Bank Investment Co Ltd.

The largest shareholder is the Central Huijin Investment Co, which controls an 85.228 percent stake in the joint stock firm.

Fan was sensitive about the latest development of the bank's shareholding reform, including the introduction of foreign strategic investors.

He said he did not have any further information, besides that disclosed on its website last month.

"We will try to list shares in Hong Kong before the end of this year," he said.

According to the report posted on its website, the bank will sell shares in Hong Kong first, and then sell them in Shanghai and other markets.

The bank, which is expected to raise several billion US dollars in its initial public offering, will soon submit material including prospectus to stock exchanges and relative supervision departments.

Fan confirmed the bank's talks with potential foreign strategic investors were still going on.

"We already have several targets, some of which we have in-depth talks with," he said.

The bank plans to select between one and three such investors, he said.

The investors should have business advantages, and be willing to share management experiences with, and transfer technology to, the bank.

The bank will keep senior managerial posts available for appointees from foreign investors, he said.

Economists noted that domestic banks have to take measures to increase their competitiveness, as foreign banks will soon enter a Chinese market without restrictions.

"They have to beef up internal control and improve corporate governance," said Wang Zhao of the State Council Development Research Centre.

(China Daily June 10, 2005)