THE Hongkong Chinese Bank (HKCB), controlled by the Indonesian Lippo Group, has reported a 59.6 per cent rise in net profit to $66.6 million for last year, which is in line with market expectations. An extraordinary item of $36 million brought group profit attributable to shareholders to $102.6 million. Earnings per share before extraordinary items climbed 38.1 per cent to 19.2 cents. HKCB's result comes at the end of the bank reporting season for this year which has seen record profits in what is regarded by many as the peak year of profitability for the territory's local banks. Analysts cautioned that while earnings growth momentum was expected to continue this year, earnings per share would fall due to substantial share dilution. The directors of HKCB recommended a final dividend of six cents a share plus a special dividend of three cents a share, which, together with the interim dividend of $12 million paid out by the bank, makes a total dividend of $57 million for the year. Following a listing on the stock exchange by the bank's holding company, HKCB Bank Holding Co, in October last year, mainland-owned conglomerate China Resources (Holdings) has acquired a 15 per cent stake in the bank. The strategic alliance with the mainland group is seen as a bid to secure a steady flow of trade finance business, but analysts said the Chinese backing was not substantial enough to make the stock attractive for that reason. Union Bank and Ka Wah Bank, other local banks with major Chinese shareholders, both had comparatively more solid mainland backing plus an established presence in China. ''Basically, we don't like this stock,'' said Mr Andy Kong of Sun Hung Kai Securities. ''It's too expensive, it's too small and it's been listed too recently. ''Based on fundamentals we would never recommend this stock.'' Vickers Ballas analyst Stella Fung said the stock was trading at a prospective price-earnings multiple of about 18 times. ''This is quite expensive when compared with other domestic stocks,'' she added. She said that while the stock was not an attractive buy in the near to medium term, in the long term its prospects could improve, once it built a foothold in China. Last month the bank entered into a conditional agreement to acquire the entire issued share capital of Pacpo Capital Corp for $164.15 million, which is expected to be completed on or before April 15. Pacpo owns a majority stake in Hongkong Building and Loan Agency, which provides mortgage financing and related services to middle-income home-buyers. Also expected to be finalised later this month is a share placing agreement with China Resources, whereby the bank would arrange to place 10 per cent of the issued share capital of Hongkong Building and Loan Agency to China Resources. This arrangement is intended to further strengthen the business relationship between the group and China Resources. The bank opened a representative office in Shanghai on Thursday. Agreement has been reached with the Industrial and Commercial Bank of China and the China Travel Services group to open a joint-venture bank in Shenzhen later this year.