Agricultural Bank of China <1288.HK> is confident that its 2010 net profit will exceed its previously announced target after its massive share offering, a senior executive at the country's third-biggest bank said.
AgBank <601288.SS> had said in its prospectus that 2010 net profit would increase roughly 30 percent to 82.9 billion yuan ($12.23 billion).
Our profit growth for this year will surely exceed that figure, Pan Gongsheng, AgBank's executive vice president told Reuters on Friday.
Pan, who was instrumental in rival Industrial and Commercial Bank of China's <1398.HK><601398.SS> $21.9 billion record IPO in 2006, spoke to Reuters in an exclusive interview on the bank's Hong Kong market debut.
He cited factors such as larger business size, wider net interest margins, higher intermediate business income, higher efficiency and lower credit costs as reasons for a stronger earnings forecast.
AgBank reported a net profit rise of 40 percent to $6.8 billion for the first half, with new lending growing 11.2 percent, rapid growth seen to outperforming those of major Chinese lenders.
AgBank shares traded up 2 percent to HK$3.27 in their Hong Kong debut on Friday.
AgBank's IPO would potentially break all records by raising more than $22.1 billion if additional shares set aside in an over-allotment option are sold in coming weeks.
After the massive fundraising, Beijing-based AgBank, the last of China's big banking institutions to go public, still has to confront hurdles managing its vast network and concerns about non-performing loans.
AgBank has a sprawling network of branches in rural China, but also a presence in its major cities.
Headed by Chairman Xiang Junbo, an award-winning scriptwriter and war hero who previously served at China's central bank and National Audit Office, AgBank has 24,000 branches, 441,000 employees.
Its customer base of about 320 million is bigger than the population of the United States.
Economic growth in China's rural areas is faster than that of cities, the 46-year-old executive said. With the development of China's rural economy, the key indications of our rural business will see a gradual increase among all.
He said the bank's bad loan ratio, which stood as high as 24 percent only three years ago, would continue to go down from 2.46 percent at the end of the first quarter and 2.91 percent at the end of 2009.
Down the road, both the ratio and the outstanding of non-performing loans will decrease in a gradual way, he said.
Despite the weak market, China's third-largest bank by assets was able to pull in strong demand for the IPO.
Pan, who studied at Cambridge University, said he was happy with the outcome of the dual listing and described the pricing as scientific and reasonable. ($1=6.777 Yuan)
(Editing by Chris Lewis)