China Everbright Bank's shares rose 13 percent in early trade after their debut in Shanghai on Wednesday, a better-than-expected performance for the roughly $3 billion IPO that underlines continued interest in banking stocks.
Everbright Bank's shares opened at 3.37 yuan ($0.50) and rose to 3.50 yuan by 0155 GMT, compared with their IPO price of 3.10 yuan. The broader Shanghai index was flat.
Analysts surveyed by Reuters had estimated Everbright shares would rise up to 5 percent on their first day of trade, as renewed worries over the banking sector's health sap some demand among investors toward China's No 11 lender.
The positive result bodes well for other banks that are tapping capital markets for tens of billions of dollars in additional funds after a lending binge last year left their coffers depleted.
"The gain is within expectations due to Everbright Bank's undemanding IPO pricing," said Yu Wei, analyst at Guoyuan Securities in Shanghai.
"But any further big rise would be unlikely as investors are fully aware of the inherent risks of the banking sector, though such problems may not break out immediately. There's also concern of weaker loan demand if the property market remains sluggish."
China's No 11 lender set a lower-than-expected price range of 2.85-3.10 yuan for the IPO, in which it could raise as much as 21.7 billion yuan in China's second-biggest IPO this year if it exercises a greenshoe, or over-allotment option.
The mid-sized lender sold 6.1 billion shares in the offering, which could be expanded to 7 billion shares with the over-allotment.
Everbright Bank's debut is being watched closely as a barometer of investor enthusiasm toward banking shares amid rising concerns over lenders' asset quality due to a weak real estate market and massive local government borrowings.
Everbright Bank joined rivals in tapping the stock market for fresh capital after a 2009 lending binge blew a hole in their balance sheets.
The bank's listing also marks the culmination of a three-year toil by Chairman Tang Shuangning -- also a well-known calligrapher -- to transform it from a mismanaged lender saddled with billions of dollars in bad debts to a healthy institution.
With more than 400 branches across the country, Everbright Bank is controlled by Central Huijin, the investment arm of China's $300 billion sovereign wealth fund. Hong Kong-listed China Everbright, the Beijing-based financial conglomerate, directly owns 6.4 percent of Everbright Bank, company data showed.