On March 26, 2021, Industrial and Commercial Bank of China (ICBC, Stock code: SH: 601398; HK: 1398) announced its business performance in 2020. Last year, ICBC did a good job in coordinating epidemic prevention and control, serving the real economy and business development. ICBC continued to strengthen the foundation for stable development and created highlights in transformation and innovation, therefore achieving better-than-expected performance.
New breakthroughs were made in overall benefits. As of the end of 2020, the Group’s total assets exceeded RMB33 trillion. Domestic RMB deposits increased by RMB2.48 trillion, hitting a record high. On the basis of giving reasonable financial support to the real economy and strengthening asset quality, ICBC registered RMB317.7 billion net profit, representing an increase of 1.4% year on year; pre-provision profit RMB594.8 billion, representing an increase of 4.2% year on year. Operating revenue recorded RMB800.1 billion, rising 3.1% year on year. Cost-to-income ratio remained at an excellent level. Asset quality maintained stable. Non-performing loans (“NPLs”) ratio was 1.58%, staying within the moderate range. Both the ratios of overdue loans and special-mentioned loans declined. The aunual scissors difference between overdue loans and NPLs turned negative for the first time. Coverage ratio and capital adequacy ratio (CAR) reached 180.68% and 16.88% respectively. Comprehensive strength took another step up. ICBC ranking the 1st place among the Top 500 Banking Brands for the fifth consecutive year, and ranked 1st on the list of Top 1000 World Banks for the eighth consecutive year. According to the advice of the Board of Directors, the total dividend payout for ordinary shares is expected to be RMB94.8 billion in 2020 , that is, RMB2.66 pre-tax dividend per 10 shares.
Shoulder Responsibilities as a Large Bank, Provide Strong and Effective Support to Pandemic Prevention and Control and the Real Economy
First, ICBC fully supported pandemic prevention and control and economic recovery. Facing the unexpected Covid-19 pandemic, ICBC put protecting the people and human life above everything else. ICBC quickly established a leading group and a special work team to respond to the pandemic, adjusted pandemic prevention and control strategies based on actual situations, and built a strong line of defense against the pandemic. The whole Bank donated cash and materials totaling RMB250 million, and over 2,800 officials and employees went to the frontline of the fight against the pandemic. In the meantime, ICBC actively shouldered the important task of providing financial services. ICBC made targeted efforts, carrying out special actions in support of pandemic prevention and control, resumption of work and production, strengthening and stabilizing industrial chain and supply chain, foreign trade and foreign investment, Wuhan of Hubei, etc.. Throughout 2020, new RMB loans hit RMB1.88 trillion at home, growing RMB549.1 billion year on year. Bond investments rallied RMB1.19 trillion from the beginning of the year, leading the domestic market.
Second, ICBC vigorously promoted targeted capital injection into the real economy. ICBC actively supported national coordinated regional development strategies, such as the Beijing-Tianjin-Hebei Region, Yangtze River Delta, Guangdong-Hong Kong-Macao Greater Bay Area, Central China and Chengdu-Chongqing region, by keeping stepping up resource support. ICBC especially intensified financial support to small and micro enterprises (SME), the manufacturing industry and high-tech companies. In 2020, ICBC saw an increase of 58% in inclusive loans, of which the manufacturing industry, green industry and high-tech companies led the market in terms of the balance and increment of loans. The balance of manufacturing industry loans and green loans reached RMB1.84 trillion and RMB1.85 trillion respectively. ICBC implemented the policy of postponing principal and interest repayment on loans, relieving more than 100,000 customers’ stress and involving RMB1.5 trillion loans. Thanks to customers standing together with ICBC, the Bank’s corporate customer base was further strengthened. In 2020, loan-bearing private enterprise accounts increased by 51 thousand, while inclusive SME customers grew by 183 thousand.
Third, ICBC fully supported the battle against poverty. ICBC fully leveraged its strength in urban finance to support poverty alleviation and rural revitalization. In this process, ICBC developed a new path for poverty alleviation and development that combines the mission with finance, development of local industries, education, construction of rural health facilities, employment and consumption, making great achievement. In 2020, the growth in loans for poverty alleviation was substantially higher than the average. The four counties (cities) in Sichuan that ICBC was paired up with for poverty alleviation, namely Tongjiang, Nanjiang, Wanyuan and Jinyang, all got rid of poverty on schedule. Since it participated in the battle against poverty, ICBC has granted RMB434 billion loans for targeted poverty alleviation, helping nearly 40 million people out of poverty, and the asset quality of the above mentioned loans maintained stable.
Advance Key Strategies and Make Breakthroughs on Reform and Transformation
First, ICBC implemented the No.1 Personal Banking strategy to improve the quality and efficiency of personal finance in all respects. Throughout 2020, ICBC saw a net increase of 30.24 million on the number of individual customers, adding the total number of customers to 680 million. Personal mobile banking customers exceeded 416 million. ICBC ranked 1st in the industry in terms of the total quantity, increment and monthly average active accounts. The balance of financial assets of individual customers surpassed RMB16 trillion, maintaining a leading position in the market, of which personal deposits increased by RMB1.18 trillion or 11.3%. After launching the No.1 Personal Banking brand system, ICBC continued to lead the market on retail banking brand value worldwide. The proportion of the operating income of retail business further improved. The role of retail business as a ballast and stabilizer became more evident.
Second, ICBC accelerated digital transformation and stepped up the building of digital ICBC. The completion of the fifth-generation system marked the smooth progress of the ECOS project, maintaining ICBC’s leading role in the industry in the development of IT infrastructure. In an effort to improve the adaptability and inclusiveness of financial services, ICBC creatively launched interactive online “cloud outlets” and customer managers’ “cloud studios” to provide “screen-to-screen” non-contact financial services. For senior customers, ICBC rolled out a “Happy Life Edition” of mobile banking, making it more senior-friendly by using biometric identification technologies etc., to improve senior customers’ intelligent financial service experiences. ICBC stepped up technological support to rural revitalization, by creatively developing favorable financial products for agriculture, rural areas and farmers, including “Agriculture e-Loan” “e-Chain Quick Loan”; establishing the digital rural comprehensive service platform; and launching a Beautiful Home Edition of personal mobile banking. To assist digital transformation, the Bank actively empowered such fields as industrial internet, intelligent government and intelligent healthcare, offering intelligent financial solutions to more than 10,000 partners.
Third, ICBC continued to improve global network, serving high-quality opening-up. With ICBC Auckland Branch opened and ICBC Panama Branch approved to establish in 2020, ICBC’s overseas institutional network expanded to 49 countries and regions. ICBC reinforced financial services for the “Going Global” strategy and the Belt and Road Initiative, possessing 124 branches and sub-branches in 21 countries along the Belt and Road, and promoted the Belt and Road inter-bank regular cooperation mechanism, Belt and Road Bankers Roundtable (BRBR), to cover 61 countries and regions. ICBC fully leveraged its advantages on global operation, and carried out “Chunrong Action” aimed to ensure stable foreign investment and stable foreign trade. ICBC granted a total of over RMB810 billion loans in local and foreign currencies to key foreign trade companies and foreign-invested enterprises, helping maintain stable global industrial chains and supply chains. ICBC prudently advanced RMB internationalization, becoming one of the first banks to allow cross-border use of RMB throughout the whole process of transaction of commodities. Cross-border RMB business volume exceeded RMB7.2 trillion.
Address Both Symptoms and Root Causes, Improve Risk Management Across the Board
First, ICBC maintained stable asset quality. In 2020, ICBC’s key asset quality indicators were stable, with ratios of overdue loans and special-mentioned loans dropping 16 bps and 50 bps respectively. ICBC made overall planning for serving the real economy and forestalling risks. While implementing the policy of postponing principal and interest repayment on loans, ICBC also made sure that risks arising from such loans can be identified and resolved in time, thus keeping their impacts in check.
Second, ICBC established an intelligent credit risk control system. In guarding the “entrance”, ICBC carried out full-range financing risk management, implemented the new regulations on credit approval, and established a credit approval mechanism with a clearer definition of authorities and responsibilities, and continued to improve asset selection capability. In securing the “gate”, ICBC classified risks by severity and realized differentiated, targeted risk management through intelligent risk control, to improve asset management capability. In clearing the “exit”, ICBC accelerated disposal of NPLs and further refined the on- and off-balance sheet assets, to improve asset disposal capability. Throughout 2020, ICBC disposed RMB217.6 billion of NPLs, an increase of RMB28.9 billion over the previous year.