(Yicai Global) July 12 -- Leaders of Bank of Nanjing intend to buy shares in the eastern Chinese lender, and some of them for the first time, after the bank revealed a promising earnings forecast for the first half.

Some 20 executives, directors, and supervisors will spend at least CNY8.5 million (USD1.3 million) to increase their holdings in the bank in the next three months, the urban commercial lender said in a statement yesterday.

The investments are supported by performance. The Jiangsu province-based financial institution said on July 3 that its net profit may have jumped by 20 percent to CNY10.2 billion (USD1.5 billion) in the six months to June from the same period a year ago. Revenue could have risen by 16 percent to CNY23.5 billion.

The two good developments were revealed after an abrupt setback. Lin Jingran, former president of Bank of Nanjing, resigned in late June, resulting in a stock price slump of about 10 percent.

Among the 20 buyers are Chairman Hu Shengrong, Chief Supervisor Lv Dongyang, and seven vice presidents. Only six of them were shareholders before the new plan, altogether holding 0.02 percent of the total. VP Zhu Gang and Independent Director Yu Ruiyu each plan to spend CNY1 million, more than others.

Before the latest purchasing plan, other shareholders have boosted their stakes in the lender since the first quarter. These include French banking group BNP Paribas, the largest shareholder of Bank of Nanjing, as well as the second-biggest shareholder, namely state-owned investing vehicles linked to the municipal government.

The sector is attractive as Chinese banks are undervalued. Some 36 out of 42 mainland-listed lenders have price-to-book ratios below 1. The sector's PB ratio, which compares a company's valuation to its book value, was only 0.56 as of June 30.

When bank executives increase their holdings of the company shares, the bank's stock price usually rises as the move is considered a sign of confidence, said Zhang Yiwei, a banking industry analyst at China Galaxy Securities.

But the boost may be temporary if the lender's fundamentals remain the same, Wang Yifeng, a banking analyst at Everbright Securities, pointed out.

Bank of Nanjing's moves are not unusual. Since January, executives and shareholders of at least 12 other Chinese lenders have said they will increase their stakes by a total of CNY180 million (USD26.7 million), and the pace of such announcements has accelerated since early June.

The expected demand for Bank of Nanjing's stock caused moderate excitement among investors. The stock price [SHA: 601009] climbed 2.4 percent to close at CNY10.30 (USD1.50).

Editors: Tang Shihua, Emmi Laine, Xiao Yi