China Construction Bank Corp, the world's second-largest lender by market value, said first-half profit jumped 31 percent to a record as credit demand climbed.

Net income rose to 92.8 billion yuan (US$14.5 billion), or 0.37 yuan a share, from 70.7 billion yuan, or 0.3 yuan, a year ago, the Beijing-based lender said in a statement to the Shanghai Stock Exchange yesterday. Profit almost matched the 91.5 billion yuan median estimate of eight analysts surveyed by Bloomberg News.

Construction Bank joined smaller rival Bank of Communications Co in reporting record first-half profit as demand for loans climbed in the world's second-largest economy. Lending profitability also improved after China raised interest rates three times this year. Still, the lender's Hong Kong-listed shares lost 25 percent of their market value this year on investors' concerns that defaults may climb.

"The focus going forward is credit quality instead of credit growth," Wilson Li, a Shenzhen-based analyst at Guotai Junan International Holdings Ltd, said by telephone before the results were announced. "The biggest challenge to Chinese banks in the second half is the potential economic slowdown. If that happens, there's a risk that bad loans will rise a lot."

Construction Bank's non-performing loan ratio narrowed to 1.03 percent from 1.14 percent at the start of the year, while the provision coverage ratio increased to 244.68 percent of non-performing loans from 221.14 percent.

China's banking regulator has asked banks to increase capital buffers and accelerate loan collection schedules for local government debt amid mounting concern that a record US$2.7 trillion two-year credit boom starting in 2009 will leave lenders with soaring defaults if economic growth falters.

Net interest income, or revenue from lending minus payments to depositors, rose 24 percent to 145.7 billion yuan.