City banks' IPOs top range
Updated: 2007-07-17 09:46
Bank of Nanjing and Bank of Ningbo, the first two city commercial lenders to go public at home, raised a combined 11.07 billion yuan, both pricing their shares at the top of the indicative ranges yesterday.
Bank of Nanjing, partly owned by French lender BNP Paribas, set the price for its initial public offering (IPO) of 630 million A shares at 11 yuan, at the top of the 9.80-11 yuan range set last Wednesday.
The pricing valued the bank at 34.45 times its 2006 earnings, based on its enlarged share capital, Bank of Nanjing said in a statement yesterday.
The bank said it sold 157.5 million shares, or 25 percent, to institutional investors, and the remaining 472.5 million shares to retail buyers.
The retail portion drew 864.31 billion yuan worth of subscriptions, while the institutional offer attracted 173.84 billion yuan in subscriptions, the bank said.
Bank of Ningbo, partly owned by Singapore's Oversea-Chinese Banking Corp, set the price of its 450 million A shares at 9.2 yuan. It set the indicative price range at 8 to 9.20 yuan earlier.
The final pricing is equivalent to 36.39 times its 2006 earnings.
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The retail portion was 211 times oversubscribed.
The pricing of the two banks' IPOs is in line with the average price/earnings ratio of locally listed banks of around 40 times, market analysts said.
"The market is generally optimistic about their outlook, with their good assets and capital strengths," said She Minhua, analyst from CITIC China Securities.
At the end of last year, Bank of Ningbo's non-performing loan (NPL) ratio was 0.33 percent and the Nanjing lender's was 2.47 percent, both lower than the average NPL ratio of around 3 percent at the 11 listed Chinese banks.
Bank of Ningbo's core capital adequacy ratio stood at 9.71 percent, while Bank of Nanjing's was 8.39 percent before the IPOs.
He Sheng, analyst from Changjiang Securities, suggested a rational price of 15-17 yuan after share debut of Bank of Nanjing, and 11.3-13.6 yuan for Bank of Ningbo.
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