Jul. 9, 2007 (China Knowledge) – China Minsheng Banking Corp <600016>, the nation's first privately owned bank, reported that first-half profits this year rose above 60%, based on un-audited numbers growth estimates. This was primarily due to the swell in loans they extended and the increase in demand for services like wealth management, our sources revealed. In last year's first half, profits registered at RMB 1.73 billion (US$228 million).

The US$11 billion in share sales raised by Chinese banks is set to increase growth by broadening wealth management and insurance in the world's fastest-growing economy. China's economy expects a 10.8% growth this year, according to the central bank forecast. With growing concerns of illegal capital used to fund stock purchases, the government has urged banks to place a ceiling growth at 15% this year.

Founded by 59 investors together with tycoon Liu Yonghao more than a decade ago in 1996, the bank has blossomed to average a decent growth of 40% since 2002. Market value also swelled sevenfold to RMB 165 billion. The seventh-largest by market value in the nation, the bank has accelerated this growth from 43% as of last year. It raised US$2.3 billion in private placement in March, and plans to sell RMB 20 billion of bonds to bolster capital and fund its targeted 19% increase in loans this year.

The private bank boasts a 1.2% bad-loan ratio as compared with the 8.2% average among China's state-owned banks. With its centralized screening system, it has avoided bad loans by focusing on medium-sized companies and overseas ventures like Coca-Cola Co. and Chongqing Highway Development Co. Nevertheless, the bank still lacks the reach its bigger counterparts command. Minsheng only has 287 outlets nationwide, a far cry from the 18,000 branches Industrial & Commercial Bank of China Ltd (ICBC) has.

Minsheng Bank is scheduled to release audited first-half results on August 31, as regulations deem it a requirement if profit is expected to rise or fall by 50% or more.