Business Channel 2007-08-27&08-29, 快速成长---中国的银行

Scripts:
Investors in Shanghai and Hongkong are focusing on the shares of two of China's biggest banks: the Industrial and Commercial Bank of China--ICBC and the Bank of China, both posted surging profits on Thursday for the first half of the year. Our Asia Business editor Eunice Yoon is on board. She has more. Eunice, great profits from these two companies, what's powering them?

Well, it's mainly Chinese economic boom, and more specifically the higher interest income that they've been earning, er... mainly from the corporate 1 customers that they have, also the fact that both of these banks are expanding into new businesses. Er...they are really trying to diversify 2 er... their businesses and they are moving more into credit cards, mortgage lending also wealth management and that's really helping 3 both of these banks in terms of their earnings 4 for the first half of the year. ICBC said that their numbers came in 62% higher at 5.4 billion dollars. And bank of China also said that theirs were up by 52%.

And as ICBC and Bank of China diversify, do they run the risk of exposing themselves to the sub-prime crisis that's been hitting the US?

Well, what's intersting is that yesterday both of the banks er... really were able to confirm what analysts 5 had been suspecting all along that their exposure to the problems in the United States really are very very limited. In fact, ICBC said that their exposure to the sub-prime debacle is 1.23 billion dollars. But you set that, er set that against their 1.1 trillion dollars in total assets, very small number. Also Bank of China said that their exposure is 9.7 billion dollars and even though a lot of analysts are saying that this is the largest exposure er... in terms of...for a lot of these Chinese banks, it's still only 1% of the 770 billion dollars that they have in total assets. So, er... people are saying:they have a very large capital base, they also have very strong operating earnings and so because of that this is a manageable problem for them.

So, should the outlook for their share prices be pretty positive?

Well, that's what, er,I mean, that's what a lot of analysts are saying that in the long run because people tend to bet on banks in order to use them er...really to ride on the coattails of the ecomomic boom and act as a proxy 6 to the ecomomic growth in the country. Er...they are a good bet at least that's what a lot of prople tend to believe also because the banks themselves have been able to clean up their books, and in the past several years, the bad loan problem has started to subside 7, a lot of that is because the government has been injecting so much money into these banks, so the banks have also listed, so that's been a problem that has been subsiding 8. Er...but the one thing that some analysts are concerned about is the valuations. And if there,these share prices would get a little bit too expensive 'cause they are worried that the loan growth as well as the margins 9 might not be sustainable.

Alright, thanks for the...


Notes:
ride on one's coattail: to use your connection with someone successful to achieve success yourself