Industrial & Commercial Bank of China Ltd. said its net profit rose 16% from a year earlier and announced plans to replenish its coffers.
China's biggest bank by assets said it is planning to raise as much as 25 billion yuan ($3.66 billion) via a convertible-bond issue in the domestic market.
The bank also said it will seek a mandate from shareholders to sell new shares amounting to up to 20% of its existing Hong Kong- and Shanghai-listed shares, which could raise around $48 billion, based on Thursday closing prices.
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ICBC is the latest of China's banks to announce major fund-raising plans after a lending binge—the key platform of the country's stimulus spending last year—caused their capital levels to deteriorate. The credit expansion will continue this year, though at a lower level, and analysts say 2010 could be the biggest year for fund raising in China since the initial public offerings four years ago by the country's largest banks.
Still, ICBC is in much better shape than are many of its peers. According to its annual report, issued Thursday, the percentage of capital it holds against its loans was 12.36% at the end of 2009, comfortably above the 11% minimum demanded by China's banking regulators, a level many other banks are precariously close to.
Bank of China, which plans to raise 40 billion yuan from a convertible-bond sale, as well as sell an additional $7.9 billion in a follow-on stock sale in Hong Kong, said earlier in the week that its capital-adequacy ratio at the end of last year was 11.14%.
ICBC Chairman Jiang Jianqing, speaking at a news conference, said his bank plans to keep its capital adequacy ratio above 12%, and that after this round of fund raising, ICBC won't tap the market again for three years. He said there was no timeline for the capital raising.
"We don't need to be in a rush to raise capital as ICBC's capital adequacy ratio remains one of the best among all financial institutions," he said.
When asked about whether Goldman Sachs would sell down its 3.9% stake in ICBC at the end of its lock-up period on April 28, Mr. Jiang said the investment bank was willing to retain a "majority" of its stake.
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"Goldman Sachs is satisfied with the return on their investment in ICBC, and they also expressed that they're willing to maintain a long-term strategic partnership," Mr. Jiang said.
ICBC said its net profit for the year was 128.65 billion yuan, up from 110.84 billion yuan a year earlier.
The bank extended 1.04 trillion yuan of new local-currency loans last year, increasing its outstanding yuan loans by 24% from the end of 2008. But, mirroring results at Bank of China published earlier this week, the fast credit expansion didn't help lift the bank's net-interest income, which fell 6.5% to 24.58 billion yuan last year because of a tight squeeze in net-interest margins following Beijing's aggressive interest-rate cuts in the second half of 2008.
Instead, ICBC attributed its profit growth to a significant reduction in impairment charges on loans and foreign-currency denominated debt. In 2009, the bank took an impairment charge of 23.29 billion yuan for these assets, against a 55.46 billion yuan charge a year earlier.
ICBC said its assets remained healthy, with its nonperforming loan ratio falling to 1.54% at the end of last year from 2.29% at the end of 2008. The bank said it aims to have nonperforming loan ratio of less than 1.40% at the end of 2010.
