Sicher /dabeisein -- IND BANK OF CHINA A0LB42

1398 ICBC +6.67% +0.32 5.04 3,704,126 557,629

Hong Kong-listed ICBC touches record high on market speculation

Shares in Industrial & Commercial Bank of China (ICBC) surged to a new high Wednesday on market rumours China's largest lender may acquire a stake in the Hong Kong-based Hang Seng Bank.

This follows Tuesday's speculation that Europe's largest bank HSBC will increase its stake in the Bank of Communications.

The Chinese government may allow HSBC to increase its stake in Bank of Communications, the mainland's fifth largest bank, and in return ICBC will acquire a stake in Hang Seng Bank, The Standard newspaper said today citing market talk.

None of the banks responded to the speculation.

ICBC's shares were up 34 cents or 5.4 percent at 6.69 Hong Kong dollars after touching a high of 6.79 dollars earlier today.

HSBC Holding's shares added 10 cents or 0.1 percent to 149.80 dollars, while Hang Seng Bank moved up 3.6 dollars or 2.6 percent to 140.50 dollars.

Bank of Communications, which had been lagging the financial pack, was 14 cents or 1.2 percent higher at 11.42 dollars. The stock gained more than 12 percent on Tuesday.

HSBC, which previously held a 19.9 percent stake in Bank of Communications, saw its holding diluted to 18.6 percent following the Chinese bank's A share issue.

The market is rife with speculation HSBC will restore its shareholding in Bank of Communications to 19.9 percent. At its current share price, the additional 1.3 percent in Bank of Communications will cost HSBC between 0.82 and 1 billion US dollars.

""The existing 18.6 percent stake cost HSBC 1.75 billion US dollars 3 years ago. The estimated return on investment on the deal is less than 4 percent, "" said Merrill Lynch analyst Winnie Wu.

""The stake increase should have a marginal, if any, impact on Bank of Communications' fundamentals,"" she said.

""We believe the share price at the current level has over-reacted to speculation and investors should wait for a better entry point after the speculation has cleared up.""  

Three Chinese banks ready to issue ABS totaling 12 to 15 bln yuan - source


BEIJING (XFN-ASIA) - Industrial Bank, China Merchants Bank, and China CITIC Bank are waiting for regulatory approval to launch collateralized loan obligations (CLOs), a type of asset backed securities (ABS), an industry source told XFN-Asia.

Each bank is expected to issue between 4 bln to 5 bln yuan in CLOs, similar to those issued by Shanghai Pudong Development Bank and Industrial and Commercial Bank of China (ICBC) earlier, according to the source.

Last month, Pudong Development Bank sold 4.23 bln worth of CLOs and ICBC sold 4.01 bln yuan worth.

China is pressing ahead with the second batch of pilot ABS issues by financial institutions, although the market remains small, with outstanding issuances estimated at 55.39 bln yuan, including the two recent issues.

The government has set a target of 60 bln yuan in ABS issuance this year.

The first batch of such issues started in 2005.

""Hopefully government approval will be granted in this month or the next, so the CLOs all could be launched by the end of the year,"" the source said.  

 

China's ICBC raises 4.02 bln yuan via securitization - report
The Industrial and Commercial Bank of China (ICBC) sold its first collateralized loan obligations (CLO) this year, raising 4.02 bln yuan, with the issue almost two times subscribed, the official China Securities Journal reported on Saturday.

All the assets pooled for auction are loans issued to enterprises, the newspaper said.

The newspaper cited a source with ICBC as saying that the bank will carry out more securitizations on various kinds of assets after this auction. No details were provided.  

ICBC (1398, $6.72) 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 34% 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.

We raise our target price to $5.80, representing 3.5x FY08 price-to-book ratio and believe it is the right time to take profit. We downgrade its rank from “HOLD” to “SELL”  

HK: +,04 = +,6% = 6,66h$


Analyst Info
ICBC (1398, $6.62) 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 34% 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.

SELL.  

ICBC to open subsidiary bank in US


THE Industrial and Commercial Bank of China has planned to open a subsidiary in the United States, as part of its going-global strategy which also involves Russia, Australia and the Middle East, Board Chairman Jiang Jianqing said in Beijing today.

"Preparations have been going on smoothly. We hope to receive approval from American authorities as early as possible," said Jiang, a delegate to the ongoing 17th National Congress of the Communist Party of China, at a news briefing.

Jiang said the ICBC would open a branch in Russia next month, take over a bank in Sydney and start another two new branches in Dubai and Doha respectively. However, he didn't reveal investment details.

In its latest overseas expansion, the ICBC clinched an agreement with Seng Heng Bank Limited on August 29 to acquire a stake of nearly 80 percent of the bank in Macao for 4.683 billion patacas (US$585 million), according to the bank's Website.

The ICBC currently has 16,807 domestic outlets and 98 overseas branches and representative offices as well as 1,326 correspondent banks around the world.

Apart from raising its global visibility, the bank has been engaged in financial innovations at home. In September, China's banking regulator approved the bank to set up a leading company with a registered capital of 2 billion yuan, the largest of its kind in Binhai New Area of Tianjin.  

ICBC (01398) Mainland banks have been announcing profit rise forecast lately. Bank earnings in 2007 are strong. ICBC is no exception. We expect strong performance for ICBC. Buy $6.80 Target $7.50 Cut loss $6.00  

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