SHANGHAI, Mar. 23 -- Bank of China posted a 65 percent jump in profit last year due to growing loans, fee-based revenues and a one-time tax credit.

Net profit rose to 42.8 billion yuan (US$5.5 billion), or 0.18 yuan a share, from 25.9 billion yuan, or 0.14 yuan a share a year earlier, based on international accounting standards, the Beijing-based bank said in a statement yesterday.

Its performance didn't come as a surprise as the bank said earlier this week that its profits will grow more than 50 percent due to a tax credit.

"The one-time tax credit boosted the lender's profits a lot," said Qiu Zhicheng, a Haitong Securities Co banking analyst.

The bank said it paid 4.6 billion yuan less in taxes last year after being offered pre-tax deductions for employee wages.

From January 2008, China will levy a 25 percent corporate income tax, down from today's 33 percent on domestic banks. At the same time, the government will increase the corporate tax on overseas lenders.

Bank of China's net interest income grew 20 percent to 121.4 billion yuan.

The interest rate spread between loans and deposits improved last year as the central bank twice raised lending rates to cool the economy, while raising deposit rates only once. Bank of China's net interest margin widened to 2.45 percent in 2006 from 2.33 percent a year earlier.

Fee-based income, including selling wealth management products, increased 13 percent to 27 billion yuan.

Non-interest income accounted for 18 percent of gross profit, compared with less than 10 percent for China's banking industry as a whole.

The bank is vying with rivals including overseas players like HSBC and Citigroup in gaining more fee-based income.

Earlier this week, the bank said it will start private banking from March 28 in Shanghai and Beijing to target the country's growing number of millionaires.

Its capital adequacy ratio, a core measure of a bank's strength, reached 13.59 percent at the end of last year, up from the regulatory minimum requirement of eight percent.