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Asia-PacificFebruary 1 2013

Banks to watch in 2013, Bank of Inner Mongolia

The Banker has identified 13 banks to keep an eye on in the coming year based on a variety of factors. China-based Bank of Inner Mongolia was one of the fastest movers in The Banker’s Top 1000 rankings in 2012, and its most recent published figures suggest this growth will continue, making it one to watch in 2013.
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“There is oil in the Middle East; there is rare earth in China,” Deng Xiaoping is often quoted as having said back in 1992, when he recognised the importance of the mining sector to China’s future growth.

And it is the autonomous region of Inner Mongolia that has been at the forefront of this mining-fuelled growth, with the province being home to one of the world’s largest sources of rare earth metals, which are typically used in mobile phones and flat-screen televisions, as well as other natural resources.

According to research by Deutsche Bank, real gross domestic product growth in Inner Mongolia for 2011 was 14.3%, far above the national average of 9.2%.

As happened in neighbouring Mongolia, the banking sector in Inner Mongolia has grown in tandem with the commodities boom in providing corporate and consumer banking services along the supply chain of the mining industry.

One such lender is the Bank of Inner Mongolia, which was one of the fastest movers in The Banker’s Top 1000 rankings in 2012. The bank was the world’s eighth highest mover in the ranking and had a Tier 1 capital change of 156.82% to $1.1bn at the end of 2011. In the same year, the bank also reported pre-tax profits of $127.04m, a growth of 55.51% on the year before.

These figures mean the bank is now making waves on a global level, and in 2011 it was one of the Chinese banks that was making its presence known at Sibos, the international transaction banking conference.

However, back at home there have been fears that the mining boom in Inner Mongolia is unsustainable, both in economic and environmental terms. Since 2011 the government has cracked down on illegal coal mining, but in terms of the economic impact, there are signs that the economic boom could have already come to an end.

Approximately 250 kilometres from the Inner Mongolian capital of Hohhot is the city of Ordos, which has been dubbed by international media as the biggest ghost town in China. At a national level, also, there have also been fears that a downturn in the property sector could cause non-performing loans to reach crisis levels.

The most recent published figures from the Bank of Inner Mongolia show a continued rapid rise in profits, and point to it being at the forefront of China’s growth story. This bank is one to watch as its performance can be viewed as barometer for the country’s mining sector as well as the Chinese economy as a whole.

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