Industrial & Commercial Bank of China Ltd overtook Bank of America Corp as the world's second-most valuable financial firm, even though the Beijing-based company earns about one-third the profit.

Industrial & Commercial Bank of China Ltd overtook Bank of America Corp as the world's second-most valuable financial firm, even though the Beijing-based company earns about one-third the profit.

Shares of the bank, known as ICBC, rose 5.5% to 5.59 yuan at the 3 pm close Thursday in Shanghai, valuing the company at $228 billion. That trails only Citigroup Inc's $250 billion.

China's 10% growth and its $2 trillion of household savings are attracting foreign banks such as Citigroup, whose chief executive Charles Prince Thursday announced plans to double his network in the country. ICBC trades at earnings multiples that are more than double those of Citigroup and Bank of America, while its return on assets trails by at least half.

"What does it tell you when the world's second-biggest bank is Chinese?" said Klaus Kaldemorgen, head of Deutsche Bank AG's DWS mutual fund unit, which manages the equivalent of $338 billion and is invested in China. "I like Chinese companies, but the valuations in the financial sector are just ridiculous and incredibly inflated."

ICBC's yuan-denominated shares trade at a 29% premium to the Hong Kong stock, having soared 79% since an October initial stock sale.

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