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Industrial Bank shares gain 53% on debut

(Shanghai Daily)
Updated: 2007-02-05 13:45

The strategy could fail should the cost of capital rise in the interbank market, Wang said. Also, Industrial Bank lacks distribution outlets to attract enough deposits and doesn't have a clear plan to develop fee-income services, she said.

The bank, established in 1988, has a network of 338 branches, one-fiftieth the size of ICBC's. The company has compensated somewhat through online banking that helped it achieve average lending growth of 24 percent over the past three years.

The bank's outstanding loans rose to 292.3 billion yuan as of June 30. The bad-loan ratio stood at 2.01 percent, lower than the 2.81 percent average of its peers. Assets reached 532.2 billion yuan.

Industrial Bank now trades at about 3.4 times its estimated 2007 book value. That compares with 3.2 times for ICBC and 2.9 times for Bank of China, using their current stock prices on the Shanghai exchange.

Industrial Bank said it will use the sale proceeds to boost its capital adequacy ratio above the minimum regulatory requirement of 8 percent from 7.17 percent as of June 30. It will also expand into new products and businesses, open more branches and upgrade its computer network.

HSBC's Hang Seng Bank unit owns 12.78 percent of Industrial Bank after the completion of the share sale. International Finance Corp, the World Bank's private investment arm, has a 3.2 percent stake and a unit of Government of Singapore Investment Corp holds 4 percent.

Bank of China International is managing the sale.

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