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Wednesday, December 27, 2006

ICBC Overtakes HSBC as Largest Non-U.S. Bank by Value

The Bloomberg news reported the big jump of the ICBC's market value after its IPO in Hong Kong and Shanghai stock market on Oct. 26, 2006.

Shares of Industrial & Commercial Bank, known as ICBC, surged by the daily limit of 9.9 percent to close at 5.21 yuan in Shanghai, valuing the firm at $214.2 billion. HSBC had a market capitalization of 106.5 billion pounds ($208.4 billion) at the close of trading in London on Dec. 22, behind Citigroup Inc., the largest financial firm, at $268 billion and Bank of America Corp. at $239.6 billion.

State-controlled ICBC's shares have soared 67 percent on the domestic stock exchange since its debut on Oct. 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.

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 $47 billion from share sales since June 2005.

Bank of China

Shares of Bank of China Ltd. gained 7.5 percent to 4.30 yuan in Shanghai, catapulting the bank to the world's sixth-largest lender with a market capitalization of $135.9 billion. It overtook Mitsubishi UFJ Financial Group Inc.

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 Nov. 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.

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