SHARES in China Merchants Bank rose yesterday after the bank said its third-quarter profits more than doubled on rising fee-based income.
Shares of the Shenzhen-based bank rose 3.01 percent to 41.71 yuan (US$5.55) yesterday in Shanghai, outperforming the benchmark Shanghai Composite Index, which edged up 1.87 percent to close at 5,773.39.
The third-quarter net income of Merchants Bank rose to 3.9 billion yuan, or 0.26 yuan a share, from 1.6 billion yuan a year earlier, the bank said in a statement to the Shanghai Stock Exchange yesterday.
The bank's profit in the first nine months also more than doubled to 10 billion yuan, or 0.68 yuan a share, from 4.4 billion yuan, or 0.30 yuan a share the year previously, the bank said.
Fee and commission income more than doubled to 1.9 billion yuan, while net interest income rose to 9.7 billion yuan in the third quarter from 5.3 billion yuan a year earlier.
"The third-quarter figures are slightly better than we expected," said Qiu Zhicheng, a Haitong Securities Co analyst. "The growth is mainly driven by retail business and a booming economy.
"We have increased our profit growth forecast for the bank to 90 percent in 2007 and 61 percent in 2008," Qiu said.
Qiu rated the bank "buy" with a six-month target price of 50 yuan.
Standard & Poor's on Monday rated Merchants Bank outlook as positive.
"The ratings reflected Merchants Bank's strong domestic franchise in retail banking and sound financial profile. Implicit government support is also a positive factor," said Liao Qiang, a Standard & Poor's credit analyst.
The shareholders of the bank also passed a plan to offer stock appreciation rights to its senior managers. The pricing and date for rights execution is not set yet, the bank said in a statement to the Hong Kong stock exchange.