China Merchants Bank Co, the mainland's fifth largest listed bank, plans to set up more representative offices to boost its fledgling business in the overseas market.

The Shenzhen-based bank plans to open representative offices in London and Taipei as it speeds up expansion outside the mainland.

The bank announced these plans in a statement to the Shanghai Stock Exchange yesterday. According to the statement, it will start preparations for opening the offices this year.

Setting up representative offices will help China Merchants Bank boost its business in these cities and catch up with rivals Industrial and Commercial Bank of China and Bank of China, analysts said.

The opening of representative offices is a significant step for the bank to build its franchise in the areas, they said.

According to the statement, the bank also agreed to acquire a 60.5 percent stake in Tibet Trust & Investment Co, but it didn't reveal detailed information on timings and costs.

The stake acquisition reflects the bank's determination for expansion, analysts said.

"Acquisition and diversification are an integral part of the bank's strategy to become a one-stop financial shop," Ma Weiha, president of the bank, said yesterday.

With 570 branches on the mainland, the bank is trying to diversify into other financial sectors by making acquisitions to increase non-interest growth and offset slowing loan growth caused by a slowing economy.

"In response to significant changes in the market situation, the bank will focus on fee-based business to diversify the income source and adjust the income structure," Ma said.

The bank said it has made great efforts to increase non-interest income from retail and corporate banking and thus maintain growth momentum in non-interest income.

According to an interim report launched yesterday, the bank's net operating income grew 64.18 percent year-on-year to 28.82 billion yuan in the first half of 2008, while net non-interest income accounted for 16.2 percent of the growth. Its net profit increased 116.42 percent year-on-year to 13.245 billion yuan.

The bank's non-performing loans totaled 9.289 billion yuan, down 1.105 billion, or 10.63 percent, from the beginning of 2008. The non-performing loan ratio stood at 1.25 percent at the end of June, a decrease of 0.29 percentage points compared with the beginning of the year.

(China Daily August 20, 2008)