China Construction Bank's sluggish net fee income fell by 2% in 3Q12

But CCB's net profit increased 12% to RMB51.9bn.

According to Barclays, CCB reported net profit of RMB51.9bn in 3Q12 (2% ahead of our estimate of RMB50.8bn), up 12% y/y. The key variance to our forecast was the higher-than-expected trading income and exchange gains.

Here's more from Barclays:

Sequential NIM expansion of 10bps in 3Q12: We estimate that CCB’s NIM widened by 10bps q/q to 2.83% in 3Q12, following an 8bps expansion in 2Q12. The NIM expansion, in our view, might be due to the bank’s shrinking interbank businesses, and the slower repricing of loans vs deposits post the two rate cuts in June and July.

Steady loan/deposit growth: CCB’s total loans increased by 2.9% q/q in 3Q12, in line with system growth (3.1%), mainly driven by personal loans (+6.2% q/q), while corporate loans grew by 2.6% q/q, and a declining trend was seen in discounted bills (-1.7%) and overseas loans (-7.1% q/q). Total deposits grew by 1.1% q/q in 3Q12, due to strong growth in time deposits (+4.1% q/q) but as partially offset by falling demand deposits (-2% q/q).

Sluggish fee income in 3Q12: Net fee income fell by 2% y/y in 3Q12 and sequentially down by 17% in 3Q12, likely to be negatively affected by regulatory tightening rules, and lacklustre domestic stock market performance, in our view.

NPL amount rebounded while the NPL ratio remained flat q/q: The NPL balance increased by 3.6% q/q to Rmb72,945m at end-Sep, after being flat for two successive quarters in 1Q12 (-0.3%) and 2Q12 (-0.4%). The bank’s NPL ratio remained flat q/q, at 1.00% as of end-Sep. Credit cost was flat q/q at 46bps in 3Q12 (vs 47bps in 2Q12).

Solid capital level: The bank’s Tier-1 ratio and total CAR improved by 16bps and 5bps q/q to 11.35% and 13.87%, respectively, as of end-Sep, both above-regulatory requirements, implying a solid capital position.