A China Citic Bank Corp branch in Nanjing, Jiangsu province. The bank reported a 0.7 percent growth in net profit in 2012, and attributed the slower-than-expected rate to the increase of more than 3 billion yuan ($483 million) in provision for bad loans. Zhen Huai / for China Daily

Seventh-largest lender considering acquisition of a financial institution

China Citic Bank Corp, the country's seventh-largest lender by assets, insisted it would continue expanding its physical and online outlets to promote its retail banking business after its net profit growth almost stagnated.

Zhu Xiaohuang, president of the bank, said at a news briefing on Friday that it was considering acquiring a financial institution that would assist its strategic shift toward retail banking. "But we don't have a specific target at the moment."

China's changing economic growth pattern and fiercer competition among lenders had driven the bank to pay more attention to niche markets, he said.

"We cannot afford to compete with big players directly in traditional business. Therefore, we will channel more loans to service providers and the consumer credit business."

The bank, in which Spain's Banco Bilbao Vizcaya Argentaria SA has a 15 percent stake, is the domestic banking arm of Citic Group which operates under the direction of the State Council.

Businesses' rising defaults and the authorities' efforts to gradually liberalize interest rates have widened the performance gap among Chinese commercial lenders.

On Thursday, China Citic Bank reported a 0.7 percent growth in net profit to 31.03 billion yuan, in 2012, with a surge of 3.9 billion yuan in bad loans and 11.3 billion yuan in overdue loans.

The regulator's tightened control over shadow banking activities, especially non-transparent investments using funds collected from selling wealth-management products, would mainly hit joint-stock lenders, which are under the pressure of securing enough profit, said analysts.

Funds invested in debt that is not publicly traded accounted for 64 percent, or 151.5 billion yuan ($24.2 billion), of all wealth-management products at China Citic Bank at the end of 2012, said Zhang Qiang, the bank's vice-president.