Chinese Bank Breaks Record

On Monday, July 23rd, Reuters announced that the Industrial Bank of China (ICBC) surpassed Citigroup in terms of market capitalization, and is now the “largest” bank in the world. However, it still doesn’t mean the bank is truly the greatest in the world. It simply means that investors in Shanghai actively trade the stock, pushing it up higher. Names like Bank of America, Citigroup, UBS and HSBC will still not be forgotten in today’s competitive world. ICBC’s profits in 2006 of USD 6 billion are one third of Citigroup’s and its return on equity of 14 percent is quite weak even in the Asia-Pacific marketplace. It’s price-to-earning (P/E) ratio of 25 times earnings is quite high for the banking sector, averaging 15 times earnings. All in all, ICBC is overpriced value made it the record-breaking largest bank in the world.