Mainland Chinese banks realised better-than-expected third quarter results this fortnight, although income from fees and commission, which stem from cards and wealth management products, slowed dramatically.

Banks including ICBC, Construction Bank of China, Bank of China, Agricultural Bank of China and Bank of Communications, profited from their interest income through loans to retail and high net worth borrowers, after a regulatory change this summer. In June, China's central bank allowed banks to set their own loan rates at up to 20 per cent higher than the benchmark, and raised this ceiling to 30 per cent in July. 

But weighing on revenues, was a deterioration in growth of fees and commission income, which comprises profits from wealth management and credit cards. The Chinese regulator imposed stricter regulations this year on charges banks can impose for products, and the move has had a clear knock-on effect.

Industrial and Commercial Bank of China, the world's largest lender by assets under management, posted a 14.9 per cent rise in third quarter earnings to a record RMB62.4 billion, better than analyst estimates compiled by Bloomberg. The good results came from a higher profit on its loans. 

Net interest income at ICBC rose 16 per cent to RMB107.3 billion during July-September 2012 on the previous year, although income from fee-based services such as credit cards inched up just 1.5 per cent to RMB24.9 billion, the bank said.

The nation's second largest lender, Construction Bank of China's 12 per cent increase in the third quarter earnings was in line with Bloomberg analyst estimates. Its net interest income rose 18 per cent from the previous year, to RMB91.3 billion. Fees and commission income grew marginally up 1.6 per cent to RMB69.9 billion, compared with a 40 per cent rise the previous year. 

Meanwhile Bank of China reported better than expected 17 per cent increase in third quarter profit, and net interest income grew 14.5 per cent to total RMB65.4 billion. Like its peers, net fee and commission income was down, falling 1.1 per cent to RMB15.7 billion on the previous year.

Agricultural Bank of China posted a 16 per cent rise in profit, also surpassing analyst forecasts. Net interest income rose 8.8 per cent to RMB85.5 billion, while net fee and commission income gained 8.4 per cent to RMB19.1 billion, the bank said.

Bank of Communications, China's fifth largest bank, said third quarter profit grew 12 per cent to RMB13.4 billion, slightly below analyst's estimates of RMB 13.9 billion. Net interest income grew to RMB58.4 billion from RMB49.6 billion, and net fee and commission income rose to RMB10.9 billion from RMB9.76 billion.