In a statement filed with the Shanghai stock exchange Tuesday, the lender forecast unaudited net profit at 3.72 billion yuan (HK$3.74 billion), or 0.93 yuan a share, for the full year ending December.

Revenue was up 40 percent to 13.67 billion yuan during the period, while operating profit increased 42 percent to 5.22 billion yuan, the bank said.

The bank's share price climbed 7.35 percent, or 1.63 yuan, to close at 23.81 yuan Tuesday after the profit forecast was announced.

The Fuzhou-based lender, in which Hang Seng bank (0011) owns 12.78 percent after the Shanghai listing, raised 16 billion yuan by selling one billion shares at 15.98 yuan each.

It became the fourth-biggest domestic offering by a mainland bank.

Although mainland lenders posted strong results last year, analysts expect volatility in bank shares in the first half amid concerns the central bank China, may increase rates again.

Economists say China is likely to kick off another round of austerity measures in the financial sector to slow down the economy. In 2006, gross domestic product expanded 10.7 percent.

"Amid rising inflationary pressure, the People's Bank of China should increase interest rates in the first half," said Jiming Ha, chief economist at China International Capital Corporation.

"As consumer goods and utilities prices continue to increase, inflation will jump to 2.5 percent this year, compared with 1.5 percent last year.

"If inflation were to jump to 3percent in the first quarter, this will certainly trigger an interest rate hike by Beijing."

Ha forecasts a moderate rate increase of 54 basis points for the year, in two 27-basis point adjustments.

CICC research department managing director Brian Leung said mainland financial counters continue to remain the top pick on the buy lists of investors, although shares are trading at high earnings multiples.

"The current market valuation is not cheap compared with recent years."

Leung describes the recent A-share market correction as a short-term adjustment. He remains confident in the long-term performance of equities.

Leung expects the benchmark Shanghai Composite Index to rise to between 3,300 points and 3,400 points this year, with financial, consumer and telecom sectors outperforming the market.