China Construction Bank Corp., the country's second-largest bank by assets, reported Friday a 19% increase in third-quarter net profit as lending surged from a year earlier and China's economy staged a robust recovery.

The rise contrasted with the bank's 5% net profit drop in the first half, and analysts expect further improvement in the fourth quarter as the economic recovery gains a firmer footing.

China Construction Bank said its net profit for the three months ended Sept. 30 was CNY30.31 billion (US$4.4 billion), up from CNY25.57 billion a year earlier.

For the January-September period, net profit was up 2.2% at CNY86.12 billion, said the lender.

Citigroup estimates the Chinese lender will post an 18% rise in 2009 net profit to CNY109.37 billion.

China Construction Bank, about 10%-owned by Bank of America Corp., is the first of China's big banks to report third-quarter earnings. The biggest and third largest, Industrial & Commercial Bank of China Ltd. and Bank of China Ltd., will report their July-September results next week.

Chinese banks have largely avoided the mortgage-related financial turmoil that has battered Western lenders, but they have had to contend with narrowing interest margins after Beijing aggressively cut interest rates in the second half of last year to stimulate the economy.

China Construction Bank said its third-quarter net interest income dropped 7% to CNY53.11 billion from CNY57.09 billion a year earlier.

However, the impact on earnings of a narrower net interest margin was limited by a surge in lending. China Construction Bank extended CNY154 billion worth of new loans in the third quarter, up 77% from CNY87 billion a year earlier.

Nonetheless, its lending in the third quarter was down significantly from the average quarterly rise of CNY363 billion in the first half, when the bank was enlisted to help finance public-works construction aimed at stimulating the economy amid the global financial crisis.

China's banks extended a record CNY8.7 trillion of new yuan loans in the January-September period, equivalent to nearly 40% of the country's gross domestic production for the period.

China Construction Bank has set a new loans target for this year of CNY900 billion.

After the flood of lending, the bank's core capital adequacy ratio as of Sept. 30 was 9.57%, down from 10.17% at the end of last year. Its nonperforming loan ratio dropped to 1.57% from 2.21% over the same period.