Postal Savings Bank’s HK shares rise on A-share offer plan

The bank, which operates China’s largest branch network, was reporting first-half net profit of US$4 billion, up 14.5pc on last year

PUBLISHED : Wednesday, 30 August, 2017, 1:55pm
UPDATED : Wednesday, 30 August, 2017, 10:27pm

Shares in the Postal Savings Bank of China rallied in Hong Kong on Wednesday after it unveiled plans to replenish its capital levels through an A-share offering.

Its stock ended the morning session up 3 per cent to close at HK$4.80.

The Beijing-based bank, which operates China’s largest bank branch network, was reporting first-half net profit of 26.6 billion yuan (US$4 billion), up 14.5 per cent year on year.

Officials said it plans to issue a maximum of 5.17 billion new shares onto the China’s yuan-backed A-share market, to finance further optimisation of its corporate governance structure and develop domestic and overseas online financial platforms.

In a statement, the bank said it was also necessary to consolidate its capital strength and set up a long-term capital replenishment mechanism through the offering, to preserve and strengthen its state-owned asset base.

Once the A-share listing is complete, all of China’s six biggest state-owned banks – added to Industrial and Commercial Bank of China, Bank of China, China Construction Bank, Agricultural Bank of China and Bank of Communications – will be dual-listed in Hong Kong and China.

Postal Savings’ planned A-share issuance will account for 6 per cent of the bank’s expanded shares, and its H-share contribution would be diluted to 23 per cent from the current 24.5 per cent.

The plan is still pending the approval of shareholders and the domestic regulators, including the China Securities Regulatory Commission.

The bank’s management team, including vice-president Xu Xueming, told a teleconference on its interim performance on Wednesday, that it has maintained a huge deposit base and continues to seek low funding costs as it enters the second half of the year.

They described the current monetary environment as prudent and neutral, which favours its position in the market as a major interbank market lender, enjoying high returns from lending to smaller banks.

Postal Savings Bank has 539 million individual account holders, or 40 per cent of the nation’s total population.

Customer deposits account for most its liabilities, leaving it with enough room to seek higher returns on assets with lower-cost liabilities, it said.

Xu added the bank will keep grabbing opportunities to seek better returns, making it an “ongoing winner” amid the current static monetary environment.

He also noted that greater efforts will be made to raise fee-based income from wealth management products, bancassurance and credit cards.