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A broad view of Industrial & Commercial Bank of China
05 Sep 2020 (130 views)

In a recent analysis of global banks, I indicated my personal preference to invest in the stock of Industrial & Commercial Bank of China.

It has a price earning ratio of 6.06 times, a dividend yield of 5.3% and an attractive discount when the stock is purchased in Hong Kong (compared to the price quoted in Shanghai).

Someone asked the question - are the financial information of this bank reliable?

My view is that it should be reliable. It is a large global bank - the second largest in the world by market capitalization. It is likely to have many large institutional investors who will scrutinize the financial figures closely.

I am aware about some stories of financial fraud in some listed companies in China. They tend to occure with small, obscure and relatively unknown companies.

Here is the  2019 annual report of ICB Bank.

The financial statement is audited by KPMG, a well known and large international audit firm. 

Temasek Holdings of Singapore own 8.43% of the shares listed in Hong Kong. It represents 2.05% of the total shares in the bank. I believe that Temasek Holdings would have scrutinized the financial statement carefully and read the auditor's report. 

There is a negative point. Apart from Temasek Holdings, I did not see any other foreign investors who have held a large stake in this bank. 

A total of 24.55% of the shareholdings are held by Hong Kong Securities Clearing Company and its nominee company. These shares are likely to be held by HK residents and foreigners. Apart from Temasek Holdings, none of the foreign shareholders are mentioned.

I find the annual report from ICB of China to be quite easy to read. I will study it in more detail later. 

Meanwhile, I am satisfied that the financial figures are reliable. 

Tan Kin Lian
 


A broad view of Industrial & Commercial Bank of China
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In a recent analysis of global banks, I indicated my personal preference to invest in the stock of Industrial & Commercial Bank of China.

It has a price earning ratio of 6.06 times, a dividend yield of 5.3% and an attractive discount when the stock is purchased in Hong Kong (compared to the price quoted in Shanghai).

Someone asked the question - are the financial information of this bank reliable?

My view is that it should be reliable. It is a large global bank - the second largest in the world by market capitalization. It is likely to have many large institutional investors who will scrutinize the financial figures closely.

I am aware about some stories of financial fraud in some listed companies in China. They tend to occure with small, obscure and relatively unknown companies.

Here is the  2019 annual report of ICB Bank.

The financial statement is audited by KPMG, a well known and large international audit firm. 

Temasek Holdings of Singapore own 8.43% of the shares listed in Hong Kong. It represents 2.05% of the total shares in the bank. I believe that Temasek Holdings would have scrutinized the financial statement carefully and read the auditor's report. 

There is a negative point. Apart from Temasek Holdings, I did not see any other foreign investors who have held a large stake in this bank. 

A total of 24.55% of the shareholdings are held by Hong Kong Securities Clearing Company and its nominee company. These shares are likely to be held by HK residents and foreigners. Apart from Temasek Holdings, none of the foreign shareholders are mentioned.

I find the annual report from ICB of China to be quite easy to read. I will study it in more detail later. 

Meanwhile, I am satisfied that the financial figures are reliable. 

Tan Kin Lian