China Minsheng Banking Corp witnessed a 47 per cent net profit growth in the first three quarters of this year, compared to the same period last year, the Shanghai-listed bank announced over the weekend.

Its net profit in the first three quarters stood at 1.6 billion yuan (US$193.2 million).

Turnover during the first three quarters also surged by 57 per cent from the same period last year to 12.8 billion yuan (US$1.5 billion).

The stock has also become a popular choice among fund managers and other institutional investors, including the national social security fund and the Shanghai Occupational Pension Development Centre, who were the among the biggest holders of the bank's traded shares by the end of September, according to statistics.

Shanghai Pudong Development Bank and Huaxia Bank, another two domestically listed banks, also achieved net profit rises of 27.9 per cent and 19.7 per cent respectively in the first nine months, according to their newly released third-quarter reports.

However, compared to the first six months, the banks' profit growth generally slowed down in the third quarter, as the government's macroeconomic cooling measures gradually took effect.

Minsheng's net profit in the third quarter, for example, increased by only 14.2 per cent. Its net earnings per share was 0.09 yuan (US$0.011) and return on equity was 3.84 per cent, both down moderately from the same period last year.

The first and only private bank in China, Minsheng now has the New Hope Investment Co as its biggest shareholder, a private company that controls a 6.58 per cent stake.

International Finance Corporation also holds a 1.6 per cent stake in the bank, which is still trying to attract more overseas investors.

Last month, Minsheng approved the acquisition of a 4.55 per cent stake by a unit of Singapore's State-owned investment company Temasek Holdings. This is considered a prelude to a planned H share listing by the Beijing-based lender in Hong Kong, an unprecedented move by Chinese banks.

So far, no Chinese banks have been listed overseas, though some are planning to, as the country's banking reform intensifies.

A Minsheng spokeswoman said yesterday that its H share offering preparation is well underway, but did not give details.

Earlier this year, senior bank executives predicted the H share listing would be realized within the year.

Pricing and compensation for A share holders are key factors that might affect the H share issue schedule, analysts said.

But in general, the prospects of the banking sector are rosy, especially for smaller but more commercial shareholding banks, who are at the front of the banking reform and are drawing growing attention from foreign institutions.

Banking sector is also to benefit from the central bank's most recent move to raise the benchmark interest rate, analysts said.

The central bank lifted the benchmark one-year Renminbi loans rate and one-year deposits rate by 0.27 percentage point apiece on Thursday, the first interest rate hike in nine years.

(China Daily November 2, 2004)