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ICBC profit shoots up 31.2%
By Zhang Lu and Hui Ching-hoo (China Daily)
Updated: 2007-04-04 09:06
The bank said net income rose to 49.3 billion yuan from 37.6 billion yuan the previous year, based on international accounting standards. Analysts in Hong Kong said the result is in line with market expectations. "It's a decent earning," said Castor Pang at Sun Hung Kai Financial Group. The bank had forecast its 2006 earnings would be 47.2 billion yuan during its IPO marketing. The ICBC raised a record $22 billion in its October public offering held simultaneously in Hong Kong and Shanghai. "Public listing is like a filling station, we are now at a new starting point to build the ICBC into a world-class international commercial bank," said Chairman Jiang Jianqing at the bank's first result release since the IPO. In the past three years, he said, the bank has achieved an average annual growth of around 30 percent in profit and will maintain the pace in the coming years. "We hold a positive view on the ICBC's long-term prospects given its size and strong network," Pang said. Other analysts said the implementation of the new corporate income tax next year will greatly benefit the lender. The effective tax rate for the ICBC was 30.8 percent in 2006. The profit growth would be 45 percent in 2006 had the tax rate been 25 percent, said bank President Yang Kaisheng. But some analysts worried that the central government's macroeconomic measures will affect the ICBC's development. "We should see what the government will do to contain the market liquidity, which will affect the lender's profitability," said Shum Chun-ying, managing director of Sincere Securities Ltd, adding that the bulk of the ICBC's profit still came from interest income. The bank's net interest income rose 6.2 percent to 163.1 billion yuan last year, while non-interest fee income was only one-tenth of that figure. The bank has already taken the development of intermediary services as a major task in its business restructuring. The fee income jumped 55 percent to 16.3 billion yuan, accounting for 9.14 percent of its total operating income, up 2.86 percentage points from the previous year. The bank said it will control loan growth while diversifying businesses including investment banking, bank-insurance cooperation and leasing. It will also look for merger and acquisition opportunities and set up more overseas branches, Jiang said. In January, the company decided to acquire 90 percent of PT Bank Halim Indonesia, marking its first step into the overseas market. The ICBC's shares in Shanghai closed at 5.62 yuan and HK$4.4 in Hong Kong. They have risen 80 percent and 43 percent respectively since listing, making the ICBC among the world's three largest banks, along with Citigroup and Bank of America. (For more biz stories, please visit Industries)
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