The Industrial Bank Co, a mid-sized joint stock bank, kicked off its roadshow yesterday, the first domestic initial public offering (IPO) for 2007.

 

The bank, based in East China's Fujian Province, plans to issue as many as 1.33 billion new local currency A shares on the Shanghai Stock Exchange to fund its expansion.

 

The IPO, which has been in the pipeline for more than two years, would make the Industrial Bank the eighth commercial bank to be listed on the domestic stock market.

 

The share sale, which is equivalent to 25 percent of its expanded share capital, is likely to raise as much as 23 billion yuan, analysts said.

 

"The price would probably be set between 15 and 18 yuan per share," said Qian Kun, a banking analyst at Changjiang Securities.

 

Its IPO price was previously expected to be between 10 and 12 yuan.

 

"The bank, although relatively small in size, is competitive and well run, especially its product innovation capacity," the analyst said.

 

Its stock price is likely to climb to 24 to 26 yuan, Qian said.

 

An indicative share price range will be announced within the week, the bank said in its prospectus.

 

The share offering will open for subscriptions next Monday and Tuesday and online subscriptions will be available from Tuesday, the bank said.

 

The date for the bank to begin trading on the Shanghai Stock Exchange has not yet been decided.

But the Industrial Bank said it would set the trading date as soon as possible.

 

Proceeds from the IPO will mainly be used to replenish the bank's core assets and expand its networks, it said.

 

And the bank will use capital raised in the market to build and upgrade information systems and buy fixed assets, it added.

 

The Industrial Bank, which is nearly 16 percent-owned by Hong Kong's Hang Seng Bank, had total assets of 532.2 billion yuan by the end of 2006.

 

According to British magazine The Banker, the Industrial Bank was ranked 10th among China's top 100 banks in terms of total assets and average ratio of profit to assets.

 

It chalked up a net profit of 1.74 billion yuan in the first half of last year.

 

Its net profit grew by an average 30 percent annually from 2003 to 2005.

 

"The robust growth is mainly due to the growth of two important engines the loans business and investment in bonds," the Fujian-based bank said.

 

The bank's non-performing loans stood at 2.01 percent by the end of 2005, it said.

 

Its capital adequacy ratio was 8.18 percent at the end of 2005. BOC International (China) Limited is the main underwriter for the IPO.

 

(Xinhua News Agency January 16, 2007)