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Agricultural Bank of China FY'16 profit up 1.8% YOY amid industry challenges

Agricultural Bank of China Ltd. reported a 1.8% increase in net profit for the full year 2016, as the country's banking industry faces challenges such as tightening regulation and fiercer competition.

The bank's 2016 full-year net profit edged up to 184.06 billion yuan from 180.77 billion yuan in the prior year. The full-year net profit attributable to equity holders came in at 183.94 billion yuan, up 1.9% from 180.58 billion yuan in 2015. EPS remained flat at 55 fen.

Net interest income declined to 398.10 billion yuan from 436.14 billion yuan in the prior year, while net interest margin clocked in at 2.25% in 2016, down from 2.66% a year ago. The decreases were mainly due to the consecutive interest rate cuts by the People's Bank of China and the decline in the yields of the company's businesses.

The Chinese bank's net fee and commission income for 2016 increased year over year to 90.94 billion yuan from 82.55 billion yuan.

Operating income for 2016 fell to 510.13 billion yuan from 540.86 billion yuan in 2015, while operating profit declined year over year to 226.63 billion yuan from 230.87 billion yuan.

Impairment losses on assets rose to 86.45 billion yuan in 2016 from 84.17 billion yuan in the prior year, while impairment losses on loans declined to 78.93 billion yuan in 2016 from 81.90 billion yuan a year ago, primarily due to the decrease in the allowance for impairment losses on loans assessed on an individual basis.

The company's nonperforming loan ratio decreased to 2.37% as of the end of 2016 from 2.39% in the prior-year period.

As of Dec. 31, 2016, the company's capital adequacy ratio was 13.04%, slightly down from 13.40% a year ago. Its common equity Tier 1 and Tier 1 ratios for the year were 10.38% and 11.06%, respectively, compared to 10.24% and 10.96%, respectively, at the end of 2015.

The bank's board proposed a cash dividend of 17 fen per share for 2016, up from the prior-year's dividend of 16.68 fen per share.

As of March 28, US$1 was equivalent to 6.89 Chinese yuan.