From well down the rankings two years ago hugely successful initial public offerings have propelled these three into the major league, and with foreign shareholders and economic growth in China in excess of 10% the expansion should go on.
Despite stockmarket volatility, concerns over massive trade balances and record foreign reserves, China’s banks are coming out of the wilderness and huge banking growth in the past two years has created a dynamic platform for future expansion at home and abroad.
The ‘Big Four’ state-controlled banks, which includes Agricultural Bank of China, the only one yet to undergo a major financial restructuring of its huge bad debt portfolio (see page 179), witnessed tremendous growth not only in fiscal 2006 (shown below) but also in the past two years. Comparing aggregate end-2004 and end-2006 results shows a dramatic 73.7% increase in Tier 1 capital, a 44.4% rise in total assets and a 144.3% jump in profits.
Following The Banker’s recent launch of the Top 100 Chinese banks listing (June, 2007, p77) it is clear the ‘Big Four’ are a dominant force in Chinese banking, accounting for 77.7% of aggregate Tier 1 capital, 73.3% of assets and 74.7% of pre-tax profits of the Top 100. But while the ‘Big Four’ are growing strongly, with ICBC recently announcing plans to expand abroad, and all the 31 Chinese banks in our Top 1000 are developing well, they still only account for 6.1% of aggregate Tier 1 capital, 5.4% of assets and 4.6% of profits of the world’s major banks. But watch this space.
