(Yicai Global) Jan. 4 -- A larger number of Chinese banks are expected to file for initial public offerings this year given the country's improving economic situation, after only one lender, Lanzhou Bank, did so last year.

Though the number of banks going public in the Chinese mainland has slumped, the listing environment will become “friendlier” as economic fundamentals and market sentiment pick up, according to Zhou Maohua, an analyst at Everbright Bank.

In the near future, improving banking sector valuations will also boost the enthusiasm of some small and medium-sized lenders to go public, Zhou added.

The small number of bank IPOs last year may have been due to the impact of Covid-19, which resulted in slower progress toward listing, a senior banking analyst said.

Along with the poor market environment, the banking sector’s valuation fell to a record low, making it difficult to list, the person added, noting that the authorities may have been cautious about approving IPOs of small and mid-sized banks, as their stock prices would likely have fallen on debut.

These banks remain enthusiastic despite only one listing in 2022. There are 11 in the filing queue.

“Banks are expected to have a greater appetite for capital replenishment this year, including both listings and bond issuance, among which the replenishment of core capital may be more urgent,” said Zeng Gang, director of the Shanghai Institution for Finance and Development.

But China should also continue to support them through policies to give better play to the role of small and medium-sized banks in serving the real economy and helping small and micro enterprises, Zeng added.

It is necessary to further increase financing for the real economy, strengthen economic support, and maintain reasonable credit growth and rising demand among banks for supplemental capital, he said.

Last May, the Financial Stability and Development Committee of the State Council said that small and mid-sized lenders are of great significance for the real economy and SMEs. To speed up the capital replenishment at smaller banks, regulators should deepen reforms and implement the working plan to help them supplement capital.

Editor: Martin Kadiev