Alexa
  • Directory of Taiwan

ICBC overtakes HSBC as world's 3rd-largest bank

ICBC overtakes HSBC as world's 3rd-largest bank

Industrial & Commercial Bank of China Ltd., which raised US$22 billion in the world's biggest initial public offering, overtook HSBC Holdings Plc to become the world's third-largest bank by market value after its shares rose to a record.
Shares of Industrial & Commercial Bank, known as ICBC, surged by the daily limit of 9.9 percent to 5.21 yuan yesterday in Shanghai, valuing the firm at US$214.2 billion. HSBC had a market capitalization of 106.5 billion pounds (US$208.4 billion) at the close of trading in London on Dec. 22.
State-controlled ICBC's shares have soared 67 percent on the domestic stock exchange since its debut on October 26, as investors bet a customer base bigger than Russia's population will drive profit growth in the world's fastest-growing major economy. ICBC has 153 million customers, 10 million more than the people who live in Russia.
"ICBC is a proxy to the overall rapid growth of mainland banking sector," Yuan Lin, a Beijing-based bank analyst at Bank of China International Ltd.
"The recent gain is largely liquidity-driven as household savings are pouring into the stock market. The stock is fully valued."
Investment boom
A four-year investment boom has powered annual economic expansion of 10 percent, double the global average, pushing China past the U.K. to become the world's fourth-largest economy. ICBC, Bank of China Ltd., China Construction Bank Corp., Bank of Communications Ltd, and China Merchants Bank Co. have raised more than US$47 billion from share sales since June 2005.
Shares of Bank of China Ltd. gained 8 percent to 4.32 yuan in Shanghai, catapulting the bank to the world's sixth-largest lender with a market capitalization of US$137 billion. It overtook Bank of Mitsubishi UFJ Financial Group Inc.
Strong growth expected
UBS AG expects the seven publicly traded Chinese banks it covers to post average earnings growth, when weighted for size, of 27 percent next year, according to a November 24 report. The gains will be driven by average 14 percent loan growth and an improvement in interest margins.
Beijing-based ICBC expects net income to rise 26 percent in 2006 to 47.2 billion yuan, based on international accounting standards. Bad loans at the bank were 4.1 percent of total credits as of June, down from a high of 34 percent in 2000.
Chinese banks trade at a sector average of 2.5 times their forecast book value in 2007, a 20 percent premium to the 2.1 average of global emerging market banks, according to UBS estimates. ICBC's shares in Hong Kong have gained 43 percent since debut. The Hong Kong stock market was closed for trading yesterday.
The lender is now trailing Citigroup Inc., which had a market value of US$268 billion, and Bank of America Corp., with a market value of US$239.6 billion.
ICBC was formed in 1984 from the central bank's own lending and deposit-taking operations. It ran up billions of dollars in bad loans to unprofitable state-owned enterprises and was recapitalized in 1998 and 2005.
The bank advances almost one in every six dollars loaned in China, where it employs more than 355,000 staff operating 18,000 branches.


Updated : 2021-08-02 21:40 GMT+08:00