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August 17, 2016

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Bank of Guiyang surges on share debut

BANK of Guiyang Co surged 44 percent in its Shanghai debut yesterday despite warnings of deteriorating debt quality and lenders’ cooling profit amid a slowing economy.

Shares of the lender, based in the capital of Guizhou Province, rose to 12.23 yuan (US$1.84) after it raised about 4.2 billion yuan in an initial public offering.

A reason for Bank of Guiyang’s share surge is that the shortage of new stocks triggered a capital frenzy in new banking shares. Bank of Jiangsu Co, the first Chinese commercial bank to list in the mainland market since 2009, soared 44 percent on its debut on August 2.

“First of all, it is a newly listed share, and then it is a newly listed banking share,” said Wang Jian, analyst at Guotai Jun’an Securities Co.

But Wang warned that problems linger in China’s financial system.

The International Monetary Fund last week highlighted risks to the financial system from so-called shadow credit, while the non-performing loan ratio at Chinese banks rose from 1.75 percent at end of March to 1.81 percent at the end of June, according to data from the China Banking Regulatory Commission.

The bank was the second city commercial bank listed this year. Fourteen other lenders have plans to launch IPOs by year’s end.

The bank, whose net profit rose 32 percent last year, had a bad loan ratio of 1.48 percent at the end of 2015, or 1.23 billion yuan.


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