CHINESE mainland-listed banks had a rosy year in 2006 amid growing lending and fee-based income driven by the booming economy.
Though the mainland-listed banks' profits all grew last year, analysts didn't rate them all as "buying" stock.
Smaller banks like China Merchants Bank beat their bigger rivals in terms of profits growth and future prospect. China Merchants Bank posted the biggest profit increase in 2006 among mainland-listed banks, with an 81 percent year-on-year growth. Huaxia Bank posted the lowest growth at 21.2 percent.
Some big players posted weaker-than-expected profit growth last year; for example Industrial and Commercial Bank of China (31.2 percent) and Bank of China (65 percent).
Qiu Zhicheng, a Haitong Securities Co analyst, rated "buying" on China Merchants Bank, China Minsheng Banking Corp and Shanghai Pudong Development Bank. Their shares are expected to grow more than 15 percent higher than the barometer Shanghai Composite Index in six months.
Pudong Bank has the lowest price-to-earnings ratio among mainland-listed banks and is a "safe" investment, Qiu said.
ICBC and Bank of China received a "neutral" rating which means shares may fluctuate up to five percent higher, or down to five percent lower, than the broad market in six months.
Rising fee-based income has been one of the major growth catalysts. Domestic lenders are gearing up to expand income channels from the traditional loan business and offer more products to compete with overseas banks.
For instance, ICBC's fee-based income including selling wealth management products surged 55 percent to 16.3 billion yuan (US$2.11 billion) last year. While China Merchants Bank posted a 60 percent growth.
Mainland-listed insurers, like China Life Insurance Co and Ping An Insurance, said profit grew last year on higher investment returns from the stock market plus premium growth.