Bank of Shanghai stages a strong debut

By Leng Cheng | November 16, 2016, Wednesday |

Online Edition

BANK of Shanghai Co surged 44 percent on debut today, marking a seventh bank to be listed on Chinese mainland bourses within the year amid lenders’ rush to boost capital.

Shares of the local lender headed north straightly to 25.59 yuan (US$3.73) per share in 30 minutes. The debut was 44 percent above the bank's IPO price of 17.77 yuan per share.

The Shanghai lender’s listing followed several listings of regional banks this year to boost capitals, as the stock market regulator addressed loopholes that created the so-called shadow lending and banks are demanding cash to counter rising soured debt and narrowing margins.

Bank of Jiangsu, Bank of Hangzhou, Bank of Guiyang and three other rural commercial banks in Jiangsu Province have been listed so far this year.

The lender's IPO was oversubscribed 763 times earlier in November, with a price-to-earnings ratio at 8.26, higher than the average of 7.66 for other 22 listed peers, data from the Shanghai Stock Exchange showed.

Market enthusiasm for the share comes from a relatively stable loan quality and banks' nearly 94 percent blue-chip clients which locate in the developed areas such as Yangtze Delta and Bohai Ring, Essence Securities Co said.

The lender reaped 11 billion yuan of net profit in the January to September period, an on-year rise of around 10 percent, according to its third-quarter results. Total assets reached 1.7 trillion yuan by the third quarter.

"Mortgage loans accounts for a large part of lending in Bank of Shanghai to ease the pressure of rising bad debt of corporate loans," said analyst Mu Hua at GF Securities Co. "In the near future, the bank will speed up development on consumer finance products and retail banks to enhance profitability."

Jin Yu, chairman of the Shanghai bank, said in a previous annual meeting of city commercial banks that the bank is eying a profit growth of 5-10 percent above the industry average.

Finance

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Bank of Shanghai stages a strong debut

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