Maybe our children should be learning Mandarin?
jwm
ICBC Becomes World's Most Profitable Bank on Loans (Update1)
By Luo Jun
Aug. 21 (Bloomberg) -- Industrial & Commercial Bank of China Ltd. earned a record 64.5 billion yuan ($9.42 billion) in the first half to become the world's most profitable bank after evading the credit turmoil that ravaged earnings at competitors.
Net income rose 57 percent, the Beijing-based bank said in a statement today, topping the $7.72 billion earned by closest rival HSBC Holdings Plc. Earnings per share rose to 0.19 yuan.
Chairman Jiang Jianqing has more than doubled ICBC's profit since 2005, as annual economic growth of more than 10 percent bolstered corporate loans and services to the nation's growing number of wealthy people. ICBC evaded the subprime crisis that has led to more than $500 billion of writedowns and losses at financial institutions globally by limiting foreign investment.
``This shows the rise of economic power in China,'' said Yuk Kei Lee, an analyst at Core Pacific-Yamaichi International in Hong Kong. ``ICBC's earnings power has already overtaken other global giants but we need time to see if this achievement can be sustained.''
The shares closed 2.9 percent lower in Hong Kong today. ICBC's Hong Kong shares trade at about 2.5 times analysts' consensus estimates for book value, compared with 0.84 times for Citigroup Inc. and 1.46 times for HSBC's Hong Kong-traded shares. The bank's net income may swell to $17.5 billion this year, according to analyst estimates.
Lending Grows
Profit matched the 64.8 billion yuan average estimate of eight analysts surveyed by Bloomberg News. The world's biggest bank by market value increased lending by 7.1 percent in the first half to 4.36 trillion yuan. Non-performing loans accounted for 2.41 percent of total advances as of June 30, down from 2.74 percent at the end of 2007.
The expansion comes after government efforts to cool credit growth by imposing loan quotas, raising interest rates and telling banks to set aside record amounts of deposits as reserves. These measures may start to bite in the second half though.
``The biggest risk to the banking industry is the macro economic uncertainty, no banks -- no matter how well managed -- can be immune from a slowdown,'' said Zhang Xiaojun, who manages the equivalent of $1.8 billion at Shenzhen-based Bosera Fund Management Co., including ICBC shares. ``Big banks like ICBC will do better than smaller ones because of their more diversified loan portfolio.''
ICBC's profit rose 41 percent to 31.4 billion yuan in the second quarter from 22.3 billion yuan a year earlier. The figure was calculated by subtracting first-quarter earnings from first- half profit announced today. The growth slowed from 77 percent in the first quarter.
Sandra Cai, a Hong Kong-based analyst at Daiwa Institute of Research, expects a slowdown in ICBC's earnings over the rest of 2008 on potential rate rises and reserve ratio increases as well as the risk of a deterioration in asset quality.
Financial Services
ICBC's net interest income gained 29 percent to 131.8 billion yuan as the income earned from loans outpaced interest paid on deposits. Net fee and commission income from services and products such as credit cards, wealth management and insurance sales rose 48 percent to 24.5 billion yuan.
State-controlled ICBC, formed in 1984, has 16,476 branches nationwide and 112 branches outside China, and 170 million personal customers -- equivalent to the populations of Russia and Canada combined -- offering the potential for growth in services.
ICBC was the largest national distributor of insurance policies, mutual funds, government bonds and wealth management products in 2007. The bank has diversified into fund management, financial leasing and is now seeking an insurance license. The bank also owns over 1,100 premier wealth management centers to serve high-net worth customers.
To contact the reporters on this story: Luo Jun in Shanghai at at jluo6@bloomberg.net
Last Updated: August 21, 2008 05:04 EDT
jwm
ICBC Becomes World's Most Profitable Bank on Loans (Update1)
By Luo Jun
Aug. 21 (Bloomberg) -- Industrial & Commercial Bank of China Ltd. earned a record 64.5 billion yuan ($9.42 billion) in the first half to become the world's most profitable bank after evading the credit turmoil that ravaged earnings at competitors.
Net income rose 57 percent, the Beijing-based bank said in a statement today, topping the $7.72 billion earned by closest rival HSBC Holdings Plc. Earnings per share rose to 0.19 yuan.
Chairman Jiang Jianqing has more than doubled ICBC's profit since 2005, as annual economic growth of more than 10 percent bolstered corporate loans and services to the nation's growing number of wealthy people. ICBC evaded the subprime crisis that has led to more than $500 billion of writedowns and losses at financial institutions globally by limiting foreign investment.
``This shows the rise of economic power in China,'' said Yuk Kei Lee, an analyst at Core Pacific-Yamaichi International in Hong Kong. ``ICBC's earnings power has already overtaken other global giants but we need time to see if this achievement can be sustained.''
The shares closed 2.9 percent lower in Hong Kong today. ICBC's Hong Kong shares trade at about 2.5 times analysts' consensus estimates for book value, compared with 0.84 times for Citigroup Inc. and 1.46 times for HSBC's Hong Kong-traded shares. The bank's net income may swell to $17.5 billion this year, according to analyst estimates.
Lending Grows
Profit matched the 64.8 billion yuan average estimate of eight analysts surveyed by Bloomberg News. The world's biggest bank by market value increased lending by 7.1 percent in the first half to 4.36 trillion yuan. Non-performing loans accounted for 2.41 percent of total advances as of June 30, down from 2.74 percent at the end of 2007.
The expansion comes after government efforts to cool credit growth by imposing loan quotas, raising interest rates and telling banks to set aside record amounts of deposits as reserves. These measures may start to bite in the second half though.
``The biggest risk to the banking industry is the macro economic uncertainty, no banks -- no matter how well managed -- can be immune from a slowdown,'' said Zhang Xiaojun, who manages the equivalent of $1.8 billion at Shenzhen-based Bosera Fund Management Co., including ICBC shares. ``Big banks like ICBC will do better than smaller ones because of their more diversified loan portfolio.''
ICBC's profit rose 41 percent to 31.4 billion yuan in the second quarter from 22.3 billion yuan a year earlier. The figure was calculated by subtracting first-quarter earnings from first- half profit announced today. The growth slowed from 77 percent in the first quarter.
Sandra Cai, a Hong Kong-based analyst at Daiwa Institute of Research, expects a slowdown in ICBC's earnings over the rest of 2008 on potential rate rises and reserve ratio increases as well as the risk of a deterioration in asset quality.
Financial Services
ICBC's net interest income gained 29 percent to 131.8 billion yuan as the income earned from loans outpaced interest paid on deposits. Net fee and commission income from services and products such as credit cards, wealth management and insurance sales rose 48 percent to 24.5 billion yuan.
State-controlled ICBC, formed in 1984, has 16,476 branches nationwide and 112 branches outside China, and 170 million personal customers -- equivalent to the populations of Russia and Canada combined -- offering the potential for growth in services.
ICBC was the largest national distributor of insurance policies, mutual funds, government bonds and wealth management products in 2007. The bank has diversified into fund management, financial leasing and is now seeking an insurance license. The bank also owns over 1,100 premier wealth management centers to serve high-net worth customers.
To contact the reporters on this story: Luo Jun in Shanghai at at jluo6@bloomberg.net
Last Updated: August 21, 2008 05:04 EDT
