Industrial & Commercial Bank of China Ltd. swelled second-half profit by 70 percent, while earnings growth at Bank of China Ltd. slowed on $1.3 billion of subprime writedowns.
ICBC's net income jumped to 40.48 billion yuan ($5.7 billion) from a year earlier. Bank of China had a 14 percent increase, to 26.7 billion yuan. Earnings were derived from full-year results released by the banks in Beijing today.
Bank of China, with two-thirds the assets of its larger rival, posted subprime-related losses that were more than three times bigger than the $400 million reported by ICBC. The banks have lost a combined $216 billion of market value since Nov. 1 as China's equity bubble deflated and the U.S. mortgage market collapse caused investors to shun financial stocks.
"Bank of China has been mostly bogged down by its exposure to subprime investment while ICBC has largely remained intact,'' said Fan Dizhao, who helps manage about $8.5 billion at Guotai Asset Management Co. in Shanghai, including ICBC shares.
Full-year profit at ICBC rose 65 percent, it said in a stock exchange statement today. Net income at Bank of China rose 31 percent in 2007. Both companies trailed the average of about 70 percent profit growth among China's 14 publicly traded banks.
ICBC increased lending by 12 percent in 2007 as China's fastest economic growth in 13 years spurred demand for credit. At Bank of China, loans rose 17.5 percent last year.
Industrial and Commercial Bank of China is the largest of China's Big Four state-owned commercial banks, the other 3 banks being the Bank of China, Agricultural Bank of China, and China Construction Bank, the largest bank in the world in terms of market value and one of the world's top 10 banks by assets.
It was founded as a limited company on January 1, 1984. As of 30 June 2006, it had assets of RMB 7,055 billion (US$893 billion), 18,764 outlets including 106 overseas branches and 1,165 agents globally. In July 2007, with a market capitalisation of US$254 billion it became the world's most valuable bank after a strong gain in its share price, overtaking Citigroup. However ICBC is still dwarfed by Citigroup's $2.4 trillion in assets.
ICBC has 2.5 million corporate customers and 150 million individual customers.
Bank of China Limited is one of the big four state-owned commercial banks of the People's Republic of China. Founded in 1912 to replace the Ta Ching Government Bank, it is the oldest bank in China. From its establishment until 1942, it issued banknotes on behalf of the Central Government along with the "Big Four" banks of the period: the Central Bank of China, Farmers Bank of China and Bank of Communications. Although it initially functioned as the Chinese central bank, in 1928 the Central Bank of China replaced it in that role. Subsequently, BOC became a purely commercial bank.
It is the second largest lender in China overall, and the 8th largest bank in the world by market capitalization value.
It is the most international of China's banks, with branches on every 'major' continent. Outside of mainland China, BOC also operates in 27 countries including:
Australia, Canada, United Kingdom, France, Germany, Italy, Luxembourg, Russia, Hungary, United States, Panama, Brazil, Japan, Republic of Korea, Singapore, Taiwan, Philippines, Vietnam, Malaysia, Thailand, Indonesia, Kazakhstan, Bahrain, Zambia, South Africa and there's also another branch office in Cayman Islands.
Although it is present in the above countries, its operations outside China accounted for less than 4% of the activity of the bank by both profits and assets.