| Minsheng net jumps but capital strained |
| Friday,August 25,2006 Posted: 07:04 BJT(2304 GMT) Shenzhen Daily |
BEIJING, Aug. 25 -- China Minsheng Banking Corp., the country's first private bank, saw its first-half earnings jump 38 percent but the rapid growth strained its capital base, creating an urgent need to raise funds. Minsheng said its net earnings jumped to 1.733 billion yuan (US$217.5 million) in the first half of this year from 1.259 billion yuan a year earlier. But the bank's capital adequacy ratio, a measure of financial stability, fell to 7.46 percent at the end of June, below the regulatory minimum of 8 percent. The ratio was 8.26 percent at the end of last year. Earlier this month, shareholders approved a plan to sell up to 3.5 billion new A shares in a private placement that could raise more than US$1.5 billion and bring the ratio back above the minimum. The bank listed improving the ratio as one of its key tasks for the second half, but did not say when the private placement might be launched. Domestic media said Minsheng had told regulators it would issue new shares within two months. Turnover rose 27 percent from a year earlier to 14.27 billion yuan in the first half, as China's buoyant economy boosted Minsheng's lending by 13 percent from the end of 2005 to 426.4 billion yuan. Deposits climbed 9 percent to 535 billion yuan. The bank said its bad loans as a ratio of total loans were 1.19 percent at the end of June, down 0.09 percentage point from the end of 2005. "Our company saw stable growth in our business," Minsheng said, adding that it faced risks including the impact from the government's economic cooling steps and appreciation of the yuan. The central bank has raised benchmark interest rates twice since late April and lifted bank reserve requirements twice. Minsheng said the first rate hike in late April, when the central bank only raised lending rates without touching deposit rates, was positive for its business. |
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