China Merchants sees growth from upcoming rate hike

Lender plans raising $3.2bln from rights issue to prepare for expected tougher competition.

China is about to enter a cycle of interest rate hikes soon, which could help Chinese banks see higher profits in 2010, a top Chinese banker said on Friday.

Ma Weihua, Chief Executive and President of China Merchants Bank, the country's biggest non-state lender, said he expects the bank's net profit to rise in 2010 in a higher interest-rate environment.

"I can see there is a new cycle of interest rate hikes and it will come soon," Ma told Reuters on the sidelines of the annual session of parliament in Beijing.

"To us, this means better results, higher profits this year," said Ma, a former senior central banker.

China cut interest rates on Dec. 22, 2008, by 0.27 percentage point, the last move by China's central bank on that front.

To prepare for tough competition in the new year with peers including Bank of Communications, Merchants Bank is planning to launch a $3.2 billion rights issue.

View the full story in Reuters.