Overseas banks in China's financial hub posted a combined 171 percent jump in pre-tax profit for their renminbi business in the first half of this year, the local banking watchdog said.

Following the full opening of the country's financial sector late last year, overseas banks in Shanghai achieved a rapid growth in deposits, lending and their ability to counter risks, said the Shanghai office of the China Banking Regulatory Commission (CBRC).

In a statement, the local regulator said overseas banks in Shanghai generated a total of 1.484 billion yuan in pre-tax profit for their renminbi business between January and June. That accounts for about 72 percent of their pre-tax profit contributed by foreign-currencies business, up 21.54 percentage points over the beginning of the year.

"The increase of income of overseas banks in China mainly comes from high-end customers in the renminbi retail business," said Lu Hongjun, president of the Shanghai Institute of International Finance.

So far, 16 overseas banks have been approved to set up local incorporations, with 10 of them selecting registration in Shanghai, including HSBC, Citigroup, Standard Chartered and Bank of East Asia, already kicking off their businesses as local entities.

Standard Chartered announced this week that its income in China more than doubled in the first half.

HSBC, Europe's largest bank, had earlier said its first-half earnings surged by nearly 70 percent on the mainland after the bank gained almost unlimited access to renminbi retail business this year.

"Our operation on the mainland, following local incorporation, grew strongly, with a deposit and asset growth of over 50 percent and 26 percent respectively, compared with the same period last year," said Stephen Green, HSBC's group chairman.

The CBRC's Shanghai office said the ratio of non-performing loans of overseas lenders dropped to 0.38 percent at the end of June, from 0.51 percent late last year.

(China Daily August 16, 2007)