ICBC Shares Advance in Hong Kong After Profit Beats Estimates

Industrial & Commercial Bank of China Ltd., the world’s largest lender by market value, rose the most in two months in Hong Kong after profit topped analysts’ estimates as loan profitability and fees increased.

The stock gained 2.3 percent to HK$5.71 as of 10:36 a.m., the biggest advance since June 21, while the benchmark Hang Seng Index fell 0.1 percent. ICBC rose 0.5 percent to 4.14 yuan in Shanghai.

ICBC’s second-quarter profit jumped 38 percent to a record 43 billion yuan ($6.3 billion), driven by higher earnings from lending, based on figures released by the Beijing-based company yesterday. Profit beat the 40.25 billion yuan average estimate of 10 analysts surveyed by Bloomberg.

“The quality of ICBC’s earnings was strong,” Michael Werner, a Hong Kong-based analyst at Sanford C. Bernstein & Co. wrote in a note today. “The bank has exhibited strength in its risk management and credit allocation processes and operates the most advanced infrastructure system in our coverage.”

ICBC, led by Chairman Jiang Jianqing, 57, is poised to be the world’s most profitable bank for a third straight year, benefiting from an economy that overtook Japan’s in the second quarter as the second-largest.

The largest risk to the Chinese banks would be “a sharp downturn” in the economy, Werner wrote. China’s gross domestic product expanded 10.3 percent in the second quarter, down from 11.9 percent in the first three months. Growth may slow to 9.4 percent this quarter, according to the median estimate of 14 economists surveyed by Bloomberg News.

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