ICBC's net surges on more fees and loans - ResearchInChina

Date:2008-04-30liaoyan  Text Size:

INDUSTRIAL & Commercial Bank of China Ltd, the world's biggest bank by market value, said first-quarter profit climbed 77 percent as companies borrowed more and fees from wealth management increased.

Net income climbed to 33.1 billion yuan (US$4.74 billion), or 0.10 yuan per share, from 18.7 billion yuan, or 0.06 yuan a share a year earlier, the bank said in a stock exchange statement. ICBC cited unaudited figures compiled using international accounting standards.

ICBC increased corporate loans and services to China's growing number of wealthy people even as the government stepped up a campaign to slow credit growth.

Chairman Jiang Jianqing has also made acquisitions in Indonesia, Macau and South Africa in the past year to triple the share of profit from overseas, Bloomberg News said.

"The bank has been quite innovative, such as lending more to the corporate sector, which enjoys much higher lending returns," Dorris Chen, a Shanghai-based analyst at BNP Paribas SA, said before ICBC's announcement. ICBC has also been "quite aggressively retailing wealth management products."

Bank of China Ltd, the country's third-biggest, on Monday said first quarter net income jumped 85 percent while Bank of Communications Ltd said yesterday profit doubled.

ICBC's profit growth was ahead of expectations and would lead to upgrades, Samuel Chen, an analyst at JPMorgan Chase & Co in Hong Kong, said yesterday.

Net interest income rose 36 percent to 66.3 billion yuan in the quarter from 48.1 billion yuan a year earlier. Net fee and commission income, such as fees from credit cards and mutual fund sales, almost doubled to 12.1 billion yuan.

Shares decline

The bank's shares fell 0.3 percent to close at HK$6.18 (79 US cents) yesterday in Hong Kong before the earnings announcement. In Shanghai, they rose 1.4 percent to 6.45 yuan.

ICBC, with more customers than Russia's population, has said loan growth may slow to 10 percent this year from 12 percent in 2007. China's central bank raised rates six times last year and lifted the amount banks must set aside as reserves to a high 16 percent this year.

Still, a 10 percent rise in lending remains "positive," Deutsche Bank AG analyst Krista Yue said. ICBC's hopes to draw more corporate clients to its wealth-management products means it won't see a "significant decrease" in fee income, she said.

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