Bank of Ningbo (stock code: 002142) announced a 40.9 per cent surge in its first-half unaudited profit on the eve of its trading debut on the Shenzhen Stock Exchange, heralding a rosy earnings season for mainland banks.
The city commercial lender, which raised 4.14 billion yuan from its initial public offering, earned 382.8 million yuan or 19 fen per share, compared with 271.6 million yuan or 15 fen per share a year ago, it said in a filing to the Shenzhen exchange.
The bank was the first of the mainland's 12 listed banks to release unaudited earnings figures. Sales in the first six months jumped 38 per cent to 998.5 million yuan.
"It was in line with expectations," said Changjiang Securities analyst He Sheng. "The bank has created a niche in the small firms' business."
The Ningbo bank and Bank of Nanjing (stock code: 601009) were the first city commercial lenders to receive the green light from the regulators to offer shares to the public.
Bank of Ningbo sold 450 million shares, or 18 per cent of its enlarged capital, at 9.20 yuan per share, the top end of a range.
Bank of Nanjing, which will start trading today on the Shanghai Stock Exchange, raised 6.71 billion yuan by offering 630 million shares, or 34.3 per cent of its enlarged capital, at 11 yuan each.
Market watchers expect the two stocks to surge more than 100 per cent on their first trading day partly because the shares were priced lower than their peers and investors' confidence in the banking industry was high.
Mainland banks are expected to show strong gains in first-half earnings due to increased lendings and fast-growing fee-based services.
Industrial and Commercial Bank of China (stock code: 601398), the mainland's largest lender, said first-half earnings could have increased more than 50 per cent. China Merchants Bank said profits could have more than doubled for the six months to June.
Industrial Bank said its first-half earnings would soar more than 90 per cent and China Citic Bank forecast profits would jump more than 60 per cent.
Listed firms are required to publish statements if they expect earnings to jump or fall at least 50 per cent.
"Banks are among the bright spots due to their substantial growth in the first half," said analyst Wu Yonggang of Guotai Junan Securities. "The Ningbo bank's 41 per cent growth is just the average."
Analysts attributed the surge in earnings to a sizzling national economy that was expected to grow more than 11 per cent this year. Beijing will unveil today economic statistics for the first half.
"The banks would be able to claw the momentum in the second half," said Mr Wu. "But a potential government [tightening] policy would take its toll on companies if officials decide to largely curb lending so as to [mop up] excess liquidity."