Sicher /dabeisein -- IND BANK OF CHINA A0LB42

Chinese banks expected to post strong Q3 as mortgage loans, fees jump



-- by Parvathy Ullatil --

HONG KONG (Thomson Financial) - Chinese banks are expected to report solid earnings when the major players kick off the third-quarter reporting season next week, buoyed by increased fee and commission income and solid mortgage loan growth, analysts said Friday.

""We expect strong results driven by slightly above estimate loan growth, quarter-on-quarter margin improvement, continuing fee growth, favourable trading income and low tax,"" said Bill Stacey, analyst with Credit Suisse.

After posting average earnings growth of 67 percent in the first half on robust fee income growth, the sector is expected to put in another strong showing, supported by the continued rally on the mainland and Hong Kong bourses.



Income from fees swelled 100.9 percent on average in the first half. Banks earn fees on financial products and services such as credit card sales and wealth management.

Mainland banks have shrugged off the five interest rate hikes and eight reserve requirement ratio increases implemented by the Chinese authorities this year.

Yuan-denominated loan growth stood at 17.1 percent at end-September, higher than the regulator's target of 15 percent and above 2005 and 2006 levels.

Retail loans were the main driver of growth with mortgage loans making up 30 percent of total new loans in July and August.

New residential mortgages topped 19.13 billion yuan in the third quarter compared with 12.3 billion in the first half, boosted by the strong property market in the mainland.

""The wealth effect created by investment gains from the bullish A-share stock market has provided the primary support for the rapid growth in mortgage loans,"" said Dorris Chen, analyst with BNP Paribas Equities.

Net interest margins are also expected to improve in the third quarter as bond yield and interbank rates are above the first-half average levels, retail deposits have increased and the quality and mix of loans have been improving, said Morgan Stanley.



Boom time



Earlier this week, China Merchants Bank, the mainland's sixth-largest bank by assets, said it expects net profit for the first nine months to be more than double the 4.5 billion yuan it made a year ago because of increased fee income.

That would imply a third-quarter net profit of more than 2.82 billion yuan, an increase of 68.7 percent from the third quarter of 2006.

The bank reported a 120 percent increase in first-half earnings at 6.12 billion yuan, driven by fee and loan income, as well as lower taxes.

China Merchants Bank will be the first off the block when it reports earnings on Monday.

Goldman Sachs said it expects net profit for the nine month period to be at least 8.937 billion yuan, or a minimum 70.5 percent of its full-year estimate of 12.7 billion yuan.

China's biggest bank, Industrial and Commercial Bank of China, or ICBC, is expected on Thursday to report 60 percent growth in net profit, as it continues to expand its loan portfolio.

ICBC said net profit increased 61 percent to 41 billion yuan in the year to June on greater loan growth and fee income.

Lehman Brothers said it expects a 90 percent increase in fee income and an 8 basis-point improvement in net interest margin.

""In the third quarter general trends we expect to be carried over from the second quarter include solid loan growth, continued margin expansion, robust fee income led by buoyant capital market derived business,"" said Lehman analyst Lucy Feng.

Bank of China and Bank of Communications are scheduled to unveil earnings on Oct. 30

Bank of Communications, China's fifth largest bank, has already created a stir in the market by revealing a 2007 net profit target of 20 billion yuan, a 63 percent increase from 2006.

The bank posted a 41.8 percent increase in its first-half earnings at 8. 56 billion yuan. Income from fees and commission swelled 139.3 percent to 3.1 percent, buoyed by China's buoyant stock markets.

In 2006, net profit jumped 32.7 percent to 12.26 billion yuan.

BoCom, which is 18.6 percent owned by HSBC, is expected to post a solid performance in the third quarter on rising net interest margins, fee income and benign asset quality, said Nomura International Equity Research.

Analysts expect BoCom to improve its net interest margins in the third and fourth quarter after lagging its peers at 2.73 percent in the first half.

The bank's interest margin were hurt by weak treasury business and an 18 basis-point increase in deposit rates as compared with a flat or decreasing deposit rate at China Construction Bank and ICBC.

Management has been taking steps improve earnings in the third quarter.  

1398 ICBC 7.1 +0.2 +2.90% 4,331,746 607,629

ICBC (1398, $6.9) 6M Target $5.8 Trading SELL

Net interest margin (NIM) improved from 2.32% to 2.54% in 1H07. However, we think ICBC will not benefit too much from the recent rate hikes due to its lack of ‘cheaper’ deposits. ICBC has a relatively large proportion of time deposits – over 9% of its deposits have maturity over 1year as of end-2006 versus CCB at 7% and CMB at 4% - which will get hurt from the recent rate hike.

We believe ICBC’s NIM, after a rapid expansion in 1H07, will remain stable in 2H07 and the whole year of 2008.

ICBC’s share price rose 28% in the past one month, due to the expectation of strong earnings in 3Q and encouraging A-share performance. However, we think the loan growth will decline significantly in Q4 as a result of a tight credit policy imposed by the central bank.

Our target price of $5.80 represents 3.5x FY08 price-to-book ratio and believe it is the right time to take profit.  

China's ICBC higher in Hong Kong on South African acquisition, Jan-Sept

results

HONG KONG (Thomson Financial) - Hong Kong-listed Industrial & Commercial Bank of China (ICBC) rose in early trade Friday after the mainland's biggest bank announced it is buying 20 percent of South Africa's Standard Bank for 42. 31 billion Hong Kong dollars.

ICBC's announcement of a 66 percent rise in net profit for the first nine months of this year also supported the stock.

The stock was last up 8 cents or 1.1 percent at 7.09 dollars.

""Strategically, the deal is even more intriguing, positioning both ICBC and Standard Bank in a strong position to capture growing linkages between Africa and China, and opening up the possibility of further cooperation in other developing markets,"" Macquarie analyst Nick Lord said in a note to clients.

""We believe that this deal could herald further overseas forays by China banks, and the cooperation agreement may prove to be a template for others,"" he said.

ICBC will acquire some of its shares in Standard Bank from current shareholders and subscribe to new shares, obtaining 20 percent of the enlarged share capital of South Africa's biggest banking group. The acquisition is expected to be completed by Feb 26, 2008.

""Strategically, this is consistent with ICBC's forays into Indonesia, Macau and potentially Thailand. Acquisitions have had an emerging-markets focus and are financially prudent, in our view,"" said Bill Stacey, an analyst at Credit Suisse.

""A key issue is the potential to acquire a larger stake over time and use of the new funds by Standard,"" he said.

ICBC announced Thursday that its net profit for the first nine months rose to 63.5 billion yuan under international accounting standards from 38.19 billion yuan a year earlier, buoyed by robust lending growth and increased fee income.

""This strong set of results was helped by good income growth, flat cost-to-income ratio and a relatively solid bad debt performance despite additional provisions for US sub-prime exposure,"" Macquarie's Lord said.

Lord has raised his price target for ICBC to 7.35 dollars from 4.40 dollars in view of the results, and also to reflect expected earnings accretion from the Standard Bank deal  

  ICBC (1398) (buy) reported its net profit for the 3Q was up 75.61% to 22.46B yuan. The profit was boosted by strong fee and commission income. Net fee and commission income up 135.5% to 9.4B yuan while interest income up 31.24% to 92.46B Yuan. Loans grew 11.4% from December last year. However, profit growth is expected to moderate in the Q4 as expenses such as staff costs are typically booked in the final quarter. The CAR is 12.97%.  

ABN Ups ICBC Target To HK$8.70; Keeps On Buy

ABN Amro raises ICBC's (1398.HK) target to HK$8.70 from HK$7.90
on further upside to NIM on stable funding cost; keeps on Buy.

Says given the continuing shift of deposits into shorter maturities or investment products, funding costs could remain stable while assets continue to reprice.

"We believe this remains a key source of potential earnings surprise going into 2008." Stock +1.9% at HK$7.40.  

1398 ICBC 7.38 +0.12 +1.65% 2,956,820 401,500  

3988 BANK OF CHINA 4.47 0.16 3.46 1,695,879 377,370
1398 ICBC 6.02 0.37 5.79 2,261,981 369,854  

 

ICBC (Asia) Target Raised To HK$25 By MS

Morgan Stanley raises ICBC (Asia) (0349.HK) target price to HK$25 from HK$18 on expectations bank to show strong growth, with HK earnings likely driven by good asset growth, normalized Hibor, healthy fees. Says Chinese earnings should be robust as loan growth increases, adding potential upside to earnings if Chinese individuals allowed to invest to HK stocks. Says company now trading at 12X forecast 2008 earnings, "leaving scope for multiple expansion." Keeps Overweight for stock, which now +1.4% at HK$17.54.  

ICBC President: No Plan To Buy Into Northern Rock  

ICBC's Jiang Says Offer to Standard Bank Is `Very Reasonable'

Industrial & Commercial Bank of China Ltd. Chairman Jiang Jianqing said he's confident Standard Bank Group Ltd. shareholders will approve a $5.6 billion investment in Africa's biggest bank, and ruled out raising the price.

Investors in South Africa's Standard Bank will vote later today on selling a 20 percent stake to ICBC, the world's largest bank by market value, for an average 120.29 rand ($17.66) in cash per share. Jiang, 54, said he traveled to South Africa last month to shore up support for the deal.

``The price we paid is based on a very reasonable valuation, and ICBC will bring a lot of synergies to Standard Bank,'' Jiang said in a Nov. 29 interview in Beijing. ``I'm very confident about the success of this investment because I've received very positive feedback from investors.''

ICBC, armed with enough cash to buy JPMorgan Chase & Co., has announced acquisitions in Indonesia, South Africa and Macau in the past year, and also is buying a stake in a Thai Bank. Jiang said he'll continue to focus on emerging markets, where ICBC has spent $6.4 billion making investments and adding branches since Jan. 1, adding that he'll be ``tightfisted'' in negotiating purchases.

The Standard Bank deal, announced in October, is the biggest overseas investment by a Chinese company and the largest foreign investment in South Africa since apartheid ended in 1994.

Public Investment Corp., Standard Bank's biggest investor, supports the transaction, the fund's Chief Executive Officer Brian Molefe said Nov. 27. PIC holds 14 percent of Standard Bank, which closed at 105 rand on Nov. 30.

`Tightfisted'

Henry Hall, Citigroup Inc.'s South Africa banking analyst, said Oct. 30 that shareholders should vote against the deal because the price is too low.

Standard Bank, based in Johannesburg, has offices in 18 African countries and 21 other nations. Jiang said he isn't planning any additional acquisitions in Africa, relying instead on joint ventures with Standard Bank. ICBC and Standard Bank will take equal stakes in a $1 billion global mining fund to invest in natural resource projects.

Jiang said ICBC, with $136 billion in cash and near-cash securities as of Sept. 30, won't overspend on acquisitions. He said an ``ideal'' investment would be in a ``healthy,'' high- growth market with close trade and economic ties to China, and where ICBC's corporate customers already have operations.

``Emerging markets are the priority in ICBC's overseas expansion strategy,'' Jiang said. ``We will be very tightfisted and spend every penny of ICBC carefully.''

Power Shift

Banks in emerging markets increased earnings per share by an average 22.6 percent from 2001 to 2006, almost double the global average, analysts at UBS AG estimated in July. Growth may accelerate to 27.8 percent this year, they said.

ICBC ``wants exposure to other high-growth markets, such as South Africa and Southeast Asia,'' said Yu Kei Lee, an analyst at Core Pacific-Yamaichi International Ltd. in Hong Kong. ``It would find more synergy making investments in banks similar to itself.''

ICBC's strategy underscores a shift in the balance of power between Chinese banks -- who raised $63 billion selling stock in the past two years -- and their rivals elsewhere, who've announced more than $60 billion of writedowns and trading losses linked to the collapse of the subprime mortgage market.

The Chinese bank wrote off about $58 million of investments in mortgage-backed securities in the third quarter. That's less than 1 percent of the $7.9 billion writedown that led to the ouster of Merrill Lynch & Co. Chief Executive Officer Stan O'Neal.

Three of Five

China is home to three of the world's five largest banks by market value. At $339 billion, ICBC is now worth more than twice as much as Citigroup, which plunged 42 percent this year in New York. The Chinese bank's cash hoard, fattened by the $22 billion raised from last year's initial public offering, is three times that of Citigroup, the largest U.S. bank by assets.

Jiang's overseas push began last December with the purchase of a 90 percent stake in PT Bank Halim Indonesia for 90 billion rupiah ($10 million). On Aug. 29, ICBC agreed to buy 79.9 percent of Macau's third-biggest bank from billionaire Stanley Ho's Sociedade de Turismo e Diversoes de Macao for almost 4.7 billion patacas ($584 million).

ICBC opened a Russian division last month with $40 million of registered capital. ICBC is also buying 19.3 percent of Thailand's ACL Bank Plc from Bangkok Bank Pcl, the country's biggest lender.  

UBS picks top 10 Asian stocks for 2008, among them HK-listed ICBC (1398.HK), Pacific Basin (2343.HK); says ICBC "one of the cheapest Chinese banks," key strengths:

restructuring upside to 16,800 nationwide outlets, defensive balance sheet, high risk-adjusted return.

Rates stock Buy with HK$7.50 target.

Says Pacific Basin is play on higher freight rates, holds positive view on dry bulk shipping for 2008, expects PB will continue to achieve higher freight rates, profit growth, at same time maintain high dividend yield.

Has Buy rating, HK$21 target. ICBC down 0.3% at HK$6.07 midday, PB flat at HK$14.22.  

1398 ICBC 5.58 +0.08 +1.45% 1,035,499 187,796


0349 ICBC Asia 18,2 - 3,19%

  ICBC Asia (0349) Along with Hang Seng Bank, ICBC Asia are the only two banks in Hong Kong with no exposure to subprime securities. The share is trading at 1.9 time book value. We expect share price to rebound. Buy $18.00 Target $22.00 Cut loss $16.00  

Expects 2007 Net Pft Up Over 60%

Industrial & Commercial Bank of China Ltd. (1398.HK), or ICBC, said Thursday it expects its 2007 net profit to have increased over 60%, boosted by significant growth in service fees and commissions. The nation's biggest bank by assets said the preliminary net profit estimate was made under Chinese accounting standards, and hasn't been audited. ICBC's restated net profit in 2006 was 48.82 billion yuan ($6.7 billion), based on Chinese accounting standards. The bank said the forecast has already accounted for a CNY12.5 billion one-off provision set aside for welfare expenses of early retired staff. The provision was made according to regulations, ICBC said. In October, the bank said its net profit for the nine months ended September rose 66% to CNY63.50 billion from CNY38.19 billion a year earlier. The Beijing-based bank is expected to release its 2007 results in late March or April.  

The Bank announced profit forecast. 2007 profit growth was more than 60%. The gain was due to higher interest income and margin and also strong growth in fee income. The strong profit growth will support share price.

Buy $4.80 Target $6.00, Cut loss $4.4  

Like ICBC (1398.HK), CCB (0939.HK) relatively outperforms, down 1.3% at HK$5.96 vs HSI down 2.7%, supported by bank tipping FY07 net profit likely to rise 48% on-year, which already includes provision for welfare expenses at CNY9 billion.

ICEA says both banks succeed to accelerate growth from 1H, "reflecting their resilience to tightened operating conditions." Valuations become attractive after recent selloff, with ICBC trading at 14.1X FY08 PER, 2.78X PBR, CCB at 14.8X, 2.88X.

"Together with their proven track records, they become our top picks for bottom fishing." CCB fourth most heavily traded with HK$917 million.  

Industrial and Commercial Bank of China (1398.HK: Quote, Profile, Research) rose 4.13 percent to HK$5.29. China's banking regulator has approved ICBC's acquisition of a 20 percent stake in South Africa's Standard Bank SKBJ.J, Xinhua news agency reported on Sunday.

1398 ICBC 5.26 0.18 3.54 2,060,420 391,714  

ICBC Down In HK But Ignores Provision News

ICBC (1398.HK) down  while HSI down 1.8%,

mostly ignoring news it has raised provisions to 30% of US$1.2 billion subprime assets, translating into CNY2.59 billion vs CNY1.62 billion provision at end-September.

Kim Eng says ICBC earlier guided for 60% on-year increase in FY07 net profit, implying earnings of at least CNY78 billion; "any further provisions in FY08 should be insignificant compared to the bank's profit."

Adds China's largest bank trading at 15X FY08 earnings, 3.1X book value; with stock falling 40% from peak,

may have short-term rebound but prefers mid-sized banks like CMB (3968.HK), BoCom (3328 HK)  

Industrial and Commercial Bank of China (Asia) Ltd said its net profit rose 29 pct year-on-year to 1.61 bln hkd in 2007 on the back of rising net interest income and net fee income.

Net interest income for the period rose 29 pct to 2.39 bln hkd, due mainly to the strong growth in its loan portfolio during 2007 as well as the slight improvement of its overall net interest margin from 1.45 pct to 1.47 pct, the bank said in a statement.

Net fee and commission income increased by 20 pct to 676 mln hkd due to a strong stockbroking business, it added.

With effective cost controls, the bank's cost-to-income ratio also improved to 35.6 pct from 36.4 pct a year earlier.

Its consolidated impairment losses were down by 3 pct to 134 mln last year, while impairment losses on available-for-sale financial investments reached 252 mln hkd in 2007, of which 234 mln hkd was an impairment loss on notes issued by a structured investment vehicle (SIV).

The bank declared a final dividend of 0.63 hkd, up from 0.46 a year earlier.  

ICBC +6.1%; FY07 Profit Likley +63% - Kim Eng

ICBC (1398.HK) +6.1% at HK$5.08 ahead of FY07 results after market close.

Kim Eng forecasts net profit likely +63% on-year at CNY80.2 billion, mostly in line with CNY80.5 billion pegged by Thomson.

Unlikely much surprise in terms of bottom-line figure as ICBC itself had tipped earnings to rise more than 60%. Kim Eng says ICBC's exposure to subprime-related assets around CNY8.6 billion, bank has already made CNY1.6 billion of provision; bigger provision in 4Q07 widely expected, but provision "could be quite insignificant" vs bottom-line.

Adds ICBC trades at 13X FY08 P/E, 2.7X P/B before today's jump. Stock is 6th most heavily traded with HK$1.16 billion.  

Industrial & Commercial Bank of China Ltd., the world's biggest by market value, boosted second- half profit by 70 percent, while earnings growth at Bank of China Ltd. slowed on $1.3 billion of subprime writedowns.

ICBC's net income jumped to 40.48 billion yuan ($5.7 billion) from a year earlier. Bank of China had a 14 percent increase, to 26.7 billion yuan. Earnings were derived from full- year results released by the banks in Beijing today.  

Hong Kong-listed Industrial & Commercial Bank of China Ltd (ICBC), the mainland's largest bank, said its net profit in 2007 grew 65 percent on rising interest income and increased fees.

Net profit rose to 81.5 billion yuan from 49.3 billion yuan in 2006, ICBC said in a statement.

Analysts polled by Thomson Financial were expecting, on average, net profit of 87.7 billion yuan.

Higher demand for loans and financial services due to China's booming economy bolstered ICBC's income, said analysts. China's economy expanded 11.4 percent in 2007, the fastest in 13 years.

The bank, which operates over 17,000 branches within and outside the mainland, said net interest income reached 224.5 billion yuan, up 37 percent from 163.5 billion yuan in 2006. Net fee and commission income more than doubled to 34.4 billion yuan, the bank said.

Net interest margin, a key measure of profitability, grew to 2.8 percent at the end of 2007 from 2.4 percent a year earlier, helped by six interest rate hikes in China last year.

China hiked interest rates six times in 2007 to curb rising inflation. It also raised the bank reserve requirement, or the amount of cash banks need to set aside as reserves, to limit bank loans in a bid to cool the economy.



Further tightening



Further monetary tightening on the mainland could weigh on bank results this year, analysts said.

""We expect bank performance to be challenged by government tightening measures in the coming couple of months,"" Deutsche Bank analyst Krista Yue said in a note before the results release.

The investment bank forecasts loan growth will slow to 14 percent this year from about 16 percent last year.

ICBC's ratio of non-performing loans to total loans fell by more than a percentage point to 2.74 percent at the end of 2007.

ICBC said it held US sub-prime residential mortgage-backed securities of 1.2 billion US dollars as of end-2007, and 55 million dollars in structured investment vehicles. It has so far made an allowance for impairment losses of 400 million dollars for the securities.

The bank does not hold any collaterized debt obligations related to US subprime mortgages.

Deutsche Bank's Yue said further credit tightening in the mainland will likely weigh on the stock performance of most mainland banks. But ICBC is Deutsche Bank's top pick among mainland lenders ""due to its leading customer and deposit franchise, lower reliance on loan growth and cost efficiency,"" said Yue.

Shares of ICBC advanced 8.6 percent on Tuesday to 5.20 Hong Kong dollars in line with the gains on the broader market. The Hang Seng Index closed up 1,356.30 points or 6.4 percent at 22,464.52.  

Finde die nirgends außer an der NASDAQ OTC gelistet.
Welche ISIN/WKN haben die denn jetzt, weil die alte WKN wird nicht mehr gehandelt.

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ICBC: impact of U.S. subprime crisis on Chinese banks overestimated
The direct losses of Chinese banks from the U.S. subprime crisis were not especially large in the amount, Jiang Jianqing, chairman of the ICBC, said Saturday.