There’s no stopping China. As its athletes in Beijing continue to dominate the gold medals on the podiums, success has spread to the international banking sector.

The Industrial and Commercial Bank of China (ICBC) has leapfrogged its biggest global rivals and was yesterday hailed as the world’s most profitable bank - only three years after being rescued in a government bailout. ICBC, which has overtaken the likes of Citigroup and HSBC to become the world’s most highly valued bank, yesterday unveiled a first-half net income rise of 57 per cent over the same period last year.

Analysts in Hong Kong said that the record-breaking 64.5 billion yuan (£5.05 billion) earned in the first half was comfortably ahead of the £4.13 billion announced by HSBC at its interim results.

Although some believe that ICBC’s spectacular milestone redraws the global banking map, others sounded a note of caution. The Chinese banking sector remains immature, and could be damaged by a global economic slowdown to which even China would probably not be immune.

ICBC, though, is likely to weather even the worst of that storm, Macquarie analysts said, because its entire loan book has only a 2 per cent exposure to borrowers whose profits arise from exports.

Jiang Jianqing, the chairman of the bank, said as the results were announced: “There’s still the second half and we will continue to work hard. We are confident we will be the most profitable for the full year but we’ll have to wait till the end to see who gets the gold medal.”

However, few doubt that the sharp rise in profits reflects the vast longer-term growth potential of the Chinese banking sector as the growing economy creates wave after wave of new savers and borrowers.

As China’s largest bank, ICBC has used its nearly 16,500 branches to build a domestic customer base of 170 million – larger than the populations of Britain and Germany combined. Analysts at CLSA believe that ICBC and a handful of other leading Chinese financial names may be close to delivering a seismic shift in the consumption patterns of the country’s rapidly swelling middle class: the mass adoption of credit cards.

ICBC’s strong results coincide with a period of unprecedented misery for its global rivals and highlight, analysts said, the relative insulation of China’s banking titans from the US sub-prime scourge that has badly hit Wall Street and European financial houses.

In the past year writedowns have reached $55.1 billion (£29.3 billion) at Citigroup and $44.2 billion at UBS. By contrast, ICBC said yesterday that by the end of June, it had written off only $702 million on its total investment of $1.21 billion in American sub-prime-related assets.

However, it did admit to holding about $2.7 billion in bonds issued by Fannie Mae and Freddie Mac, the US mortgage providers whose uncertain future has provoked fears of further misery for Wall Street.

Although the bank has diversified profitably into wealth management, insurance and government bond sales, ICBC’s greater-than-expected profitability in the first six months of 2008 arose chiefly from the strength of the bank’s domestic loans business. It, along with the businesses of other leading lenders, has remained highly buoyant despite efforts by the Chinese authorities to curb runaway corporate and retail borrowing.

Government efforts to apply the brakes to credit growth has involved a series of measures including stricter loan quotas and demands that the banks hold extensive deposits as reserves. More bearish investors believe that the effects of these measures have not yet filtered through to the bottom line, but will hurt second-half earnings growth as they begin to bite.

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