The 22 billion yuan (HK$24.97 billion) China Merchants Bank is looking to raise in a rights issue should mean the lender will not have to tap the market again for the next three years, according to president Ma Weihua. The mainland's sixth-largest lender plans to raise the funds through a five-for-20 rights issue of Hong Kong-listed H shares and Shanghai-listed A shares to boost its capital adequacy ratio. Merchants Bank expects its tier-1 capital - the core measure of a bank's financial strength - to increase from 6.5 to 8.5 per cent and total capital adequacy ratio from 10.6 to 12.6 per cent after the issue. Ma said at a briefing in Shenzhen this week that shareholders he had met had reacted positively to the exercise. They will be asked to approve it on Monday. He said the fund-raising would assist the second phase of the bank's 'business transformation', which will see it focus on increasing the proportion of non-interest income. He said the bank had in the past five years transformed from relying on wholesale banking and interest income to a more diversified model of increased retail banking and non-fee income business. Banks were being required by global and domestic regulators to strengthen their capital base, while competition in the sector was also set to intensify further, he said, but added: 'Shareholders do not like the bank to raise funds frequently.' Ma said the bank had average annual profit growth of more than 55 per cent in the past five years, but declined to comment if a similar growth rate could be achieved in the future. The bank's interim profit fell 37.62 per cent to 8.26 billion yuan from a year ago as interest margins narrowed and impairment losses rose. However, Ma said the worst was over. Last year, Merchants Bank paid 3.1 times book value for Wing Lung Bank, making it the most expensive bank acquisition in the city in recent years. The goodwill write-down on Wing Lung also dragged down Merchants Bank's earnings last year. Ma said although the acquisition had absorbed some of the bank's capital, it had provided a good platform to realise the lender's strategic goals of enhancing its competitiveness and being internationalised. He insisted that the integration had been better than expected. Wing Lung returned to profit of HK$458 million for the first six months after reporting an HK$816 million full-year loss last year. Interim net profit grew 30.7 per cent.