Bank of Communications Co Ltd made a strong debut on the Shanghai exchange yesterday.

The bank's A shares soared 71.39 percent to close at 13.54 yuan, far beyond analysts' expectations.

"It opened much higher than our expectation of around 13 yuan," said Wu Yonggang, an analyst at Guotai Jun'an Securities.

Shares opened at 14.2 yuan on the Shanghai Stock Exchange, up from the offering price of 7.9 yuan. "The opening price far exceeded my expectations," Jiang Chaoliang, chairman of Bank of Communications, said yesterday.

The bank's H shares rose 1.07 percent to close at HK$8.52.

The bank issued a total of 3.19 billion A shares, raising about 25.2 billion yuan in its initial public offering, and attracted 1.45 trillion yuan of subscription during the IPO roadshow.

"Investors still have great passion for banking stocks," said Wu. He added that the valuation of banking stocks is too high, especially for some newly-listed mainland banks, including China CITIC Bank and Bank of Communications.

Jiang said yesterday that Bank of Communications is considering diversifying its business in China through mergers and acquisitions.

Since 2005, the bank has had a 65 percent controlling stake in a joint venture fund management company. It also has insurance and securities business in Hong Kong, and is planning on setting up a series of business units on the mainland, including insurance, securities and trust companies.

Last year, the bank posted a 33.23 percent increase in net profit to 12.669 billion yuan, of which 88.91 percent was from corporate businesses. Its capital adequacy ratio was 10.83 percent, while the bad loan ratio was 2.01 percent.

HSBC, a Bank of Communications shareholder, will lower its stake in the bank from 19.9 percent to 18.6 percent after the listing, while the Ministry of Finance will reduce its stake from 21.78 percent to 20.36 percent.

Jiang said in the A-listing roadshow that he encouraged HSBC to increase its stake.

After the A-share listing, HSBC has a total of 48.99 billion shares, with 25.9 billion A shares and 23.06 billion H shares.

China Construction Bank is also seeking a dual-listing on the mainland. "We are considering mainland listing, but have yet to draw up a detailed plan," said Zhang Jianguo, president of China Construction Bank.