SHANGHAI, Aug. 27 -- CHINA Construction Bank Corp, the country's third-largest bank, holds US$1.06 billion of securities backed by US subprime loans, according to the interim statement it released yesterday.

The securities, rated AA or above, will have a "limited" impact on Construction Bank's full-year results, said the Beijing-based company in its statement. The bank has set aside 139 million yuan (US$18.4 million) against potential losses on mortgage-backed investments.

The collapse in securities backed by subprime mortgages has caused losses at lenders from Japan to Australia, helping send Asian banking stocks lower in the past month. Industrial & Commercial Bank of China Ltd, Bank of China Ltd and Construction Bank, China's three biggest lenders, held a combined US$12 billion of subprime-related investments as of June 30.

The Bank of China, which accounts for more than two-fifths of foreign currency advances by Chinese banks, was weighed down by 1.2 billion yuan in foreign-exchange losses in the period.

Construction Bank's subprime investments are dwarfed by those of Bank of China, which last week disclosed US$9.7 billion of securities linked to risky home loans in the United States, the most of any Asian company. The announcement caused Bank of China's shares to tumble.

Defaults on home loans to people with poor credit have prompted a sell-off of debt-backed securities that spread to wider credit markets and wiped more than US$5.5 trillion off the value of equities worldwide.

Construction Bank yesterday said net income surged 47 percent in the first half to 34.2 billion yuan on more profitable lending and increased income from services. The bank is preparing for a US$6.5 billion share sale in Shanghai this year.