China’s Postal Bank Reveals 11% Jump in Profit Ahead of IPO

  • Bank’s nonperforming loan ratio was 0.81 percent as of March
  • Planned initial share sale could be world’s largest in 2016

Postal Savings Bank of China Co., the lender preparing for a share offer that may raise $8 billion, reported an 11 percent increase in first-quarter profit as it pared back provisions for bad loans. 

Net income was 12.5 billion yuan ($1.9 billion) in the three months to March 31, prelisting documents filed to Hong Kong’s stock exchange showed. Earnings for 2015 rose 7 percent to 34.9 billion yuan. The lender’s nonperforming loan ratio stood at 0.81 percent as of March 31 -- or less than half the official figure for the industry as a whole.

Goldman Sachs Group Inc., Morgan Stanley, China International Capital Corp., JPMorgan Chase & Co. and Bank of America Corp. are sponsors of the planned initial public offering, the document showed. UBS Group AG is the sole financial adviser.

The bank’s provisions for bad loans more than halved in the first quarter from a year earlier.

Other key numbers from the document showed the scale of the business as of March 31, including more than half a billion customers and the nation’s biggest network of bank outlets, which includes post offices owned by China Post Group:

  • Retail customers: 505 million
  • Outlets: 40,057
  • Assets: 7.7 trillion yuan
  • Deposits: 6.73 trillion yuan
  • Loans: 2.67 trillion yuan

The bank will be the final major Chinese commercial lender to be listed, and its IPO could be the world’s biggest this year.

UBS, Temasek Holdings Pte and eight other strategic investors bought a total 17 percent stake for 45 billion yuan in December. JPMorgan and Alibaba Group Holding Ltd.’s finance affiliate, Zhejiang Ant Small & Micro Financial Services Group Co., have also invested.

The bank’s high penetration in central and western China and at the county level offers opportunities because of a significant demand for financial services that’s yet to be tapped, the prelisting document said.

Key financial data also included:

  • Net interest margin: 2.35 percent
  • Core tier-1 capital adequacy ratio: 8.35 percent

— With assistance by Jun Luo

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