Investors may not fear to buy shares of ICBC, as Citi claims

Industrial & Commercial Bank of China, China's largest bank, according to Citigroup is worthy of investors attention. In spite of that ICBC have some problems, such as non-performing loans, decline in shares returns, Citigroup advised investors to purchase the bank’s shares. It raises price target for the bank from 3.80 to 5.00 Hong Kong dollars. This price combined with expected dividend yield of 4.9% will bring a return of 26.3%, as Citigroup expects.

Citi analyst Simon Ho noted that as past share overhang of ICBC is removed, it is expected that the bank will start to outperform.

According to predictions of Citi, earnings of ICBC will rise this year by 10%, and almost 26% next year. Improvements in lending policy will lead also to decline of bad-to-good loans ratio (from 2.29% in the end of 2008 to 2.15% in the end of 2009). However, nonperforming loans portfolio can increase throughout the current year by 12%.