On August 30 2022, Industrial and Commercial Bank of China (stock code SH:601398; HK:1398) announced its business operations for the first half of the year. Since the beginning of the year, facing the increasingly complex, severe and uncertain external environment, ICBC, making stability its top priority while pursuing progress, applied the new development philosophy to promote high-quality development, and delivered interim results which were not only better than expected, but also better than that of the corresponding period in the past year.
Under the IFRSs, the Bank’s key operational indicators improved with stability in the first half of the year. The Group reported a capital adequacy ratio at 18.31%, leading major banks around the globe; coverage ratio at 207.03%, indicating sound risk resilience; NPL ratio of 1.41%, down 0.01 percentage point from the end of last year. When the Bank made more profit concessions to the real economy, return on average total assets (ROA) and return on weighted average equity (ROE) maintained at an excellent level; net interest margin (NIM) stayed in a reasonable range. Specifically, operating income totaled RMB443.8 billion, up 4.1% year on year; net profit rose 4.9% year on year to RMB172.6 billion; the balance of deposits in local and foreign currencies (including interbank deposits) exceeded RMB30 trillion, with its increment breaking RMB3 trillion for the first time. Loans to manufacturing, sci-tech innovation, green finance and other featured fields still led the market.
The Bank Fulfills Its Responsibilities as a Large Bank to Serve the Real Economy
ICBC, focusing on its main responsibilities and principal business, took the initiative to launch preemptive measures, including optimization of financial supply, to boost the stabilization of the macro economy, thus bringing its role as a leading large bank into full play.
Loans to investment and financing of the real economy hit a record high. In the first half of the year, domestic RMB loans of ICBC increased by RMB1.61 trillion, a record-high growth, ranking first in the market, and the increment was higher than that in the corresponding period of last year month by month. Added with bond investments and other investment and financing business, incremental funds of RMB2.9 trillion were extended to the real economy.
The funds were invested accurately and directly in the key areas and weak processes of the real economy. In the first half of the year, ICBC’s growth rates in loans to manufacturing, sci-tech innovation, inclusive finance, the private sector, green finance and agriculture-related fields were notably higher than the average of other loans. Among them, loans to manufacturing were 3.5 times of the loans recorded in the corresponding period of the previous year, and the balances of medium- and long-term loans and credit loans to manufacturing both exceeded RMB1 trillion for the first time. The aggregate volume and increment of loans to strategic emerging industries ranked first among its counterparts. The balance of green credits recorded approximately RMB3.5 trillion, leading peers. ICBC is also China’s first commercial bank to issue a carbon neutrality green finance bond. From the beginning of the year, the outstanding inclusive loan balance rose 27.4%. The comprehensive financing cost of small and micro enterprises was further reduced, achieving growth in both figures and quality. Furthermore, the Bank implemented the “Chunrong Action” in depth and issued on- and off-balance-sheet loans of over RMB620 billion to domestic major foreign trade and foreign-funded enterprises.
Services for regional harmonious development were delivered. ICBC served the major national strategies for regional development, and grasped the business opportunities for sci-tech innovation in key areas, industrial upgrading, green development, industrial rejuvenation and population transfer, to heighten the quality and efficiency in financial services. In the first half of the year, loans to Beijing-Tianjin-Hebei Region, Yangtze River Delta, Guangdong-Hong Kong-Macao Greater Bay Area, central China and Chengdu-Chongqing Region climbed by RMB1.19 trillion over the end of the previous year. The Bank implemented the urban-rural collaborative development strategy, to launch the ICBC Xingnongtong app, covering more than 1,700 counties across the nation and helping extending financial services to counties and rural areas. The balance of loans to key counties to be supported grew by 15%.
Enterprise bail-out was supported, and people’s livelihood was safeguarded. Focused on industries and corporations severely affected by the COVID-19 pandemic and with temporary difficulties in operations, ICBC supported pandemic control, expanded domestic demand and secured smooth logistics. At the end of June, the balances of loans to contact service sectors including accommodation and catering, wholesale and retail, cultural tourism and elderly services rose by RMB90 billion compared to the beginning of the year, with the growth rates in credit loans to healthcare, transportation and logistics leading the market. It continued to defer loan repayments for eligible businesses and individuals, launching tailored loan products to support the steady operations of small and micro enterprises and individual businesses. As a result, personal business loans grew by approximately RMB120 billion over the beginning of the year. The Bank continued to provide reasonable profit surrendering to the real economy, with the interest rate of newly issued loans in decline. Online and offline financial services were upgraded. By virtue of the interconnection of online and offline channels promoted for “Cloud Outlet”, customer demand for non-contact services was satisfied amid the pandemic, and visits to “Cloud Outlet” reached 330 million in the first half of the year. Additionally, the plan of comprehensive financial services to new citizens, based on the requirements of new citizens for employment, start-up, housing, education, medical care and pension, was released for the purpose of creating new specialized financial service experience on all fronts.
Asset Quality Is Stabilized and Improved, and Major Progress Were Made on Enterprise-wide Risk Management
ICBC pursued development and safety in a coordinated manner, giving priority to the precaution of financial risks, and the reinforcement of the Five-pronged Risk Management Approach, namely the overall risk management of domestic and overseas institutions, on- and off-balance sheet business, commercial and investment banking and other services, online and offline business, and Head Office and subordinate institutions. It followed the route of “active prevention, smart control and comprehensive management”, to make risk management more holistic, targeted and effective, trying to stay ahead of the market curve.
Asset quality indicators maintained stable with sound momentum. As of the end of June, the NPL ratio of the Group of ICBC stood at 1.41%, down 0.01 percentage point from the beginning of the year. The Bank continued the forward-looking and prudent management of NPLs, with the overdue loan rate dropping 0.03 percentage point compared to the beginning of the year. Moreover, the price scissors between overdue loans and NPLs stayed negative for 9 quarters in a row, with both the overdue ratio and price scissors hitting a record low.
The enterprise-wide risk management system was improved. ICBC established the joint control and prevention mechanism on controllable market risk in five fields, namely, currency, foreign exchange, bond, stock and commodity, in order to timely respond to fluctuations in the global financial market. Sticking to optimizing investment and credits, the Bank implemented new regulations on credit approval to sharpen its capacities on credit operation and management, and continued to deepen internal control and case prevention governance. It also maintained strict measures for pandemic control and production safety, to ensure the safety of personnel and business.
The disposal of non-performing loans was stepped up. In the first half of the year, the Bank accelerated the risk mitigation, and collected and disposed of approximately RMB100 billion of NPLs, RMB10.5 billion more than the corresponding period of the previous year. At the same time, in accordance with the prudent principle for provision charge, ICBC maintained strong risk offsetting capacity.
As the Strategic Plan Carries on, the Drive for Reform and Innovation Is Effectively Unleashed
ICBC continued to refine the strategic plan for the development of the Group, with key strategies related to personal banking, foreign exchange business, key regions and urban-rural collaborative development producing remarkable results. The “GBC+” (government, businesses and consumer) projects were implemented in depth, with the momentum for high-quality development strengthening.
The customer base continued to be consolidated. As of the end of June, the balance of personal financial assets under management (AUM) amounted to RMB17.93 trillion, representing an increase of RMB328.6 billion year on year. Personal customer accounts rose over 8.6 million from the beginning of the year. The number of mobile banking customers reached 488 million and monthly active users (MAU) topped 160 million, still leading the market. The total number of corporate customers surpassed 10 million.
Digital transformation was sped up. On the basis of maintaining its leading positions on IT, ICBC led the launch of the new digital brand “D-ICBC” in the first half of the year to push forward the “D-ICBC” construction on the five-dimensional layout of “digital ecosystem, digital assets, digital technology, digital infrastructure, and digital genes”. To improve its digital personal banking, the Bank rolled out the repayment deferral service on personal loans during the pandemic. To upgrade the mobile banking, it took the initiative to accomplish the elderly-friendly and barrier-free transformation. To better serve rural revitalization, it established a digital supply chain platform of ICBC Pooling, and extended the scenario ecosystem for the supply chain of agricultural procuring and sales. To keep the availability rate of its information system at high level, it developed cloud R&D, cloud operations and maintenance, cloud launch, cloud office, and other digital applications. Also, it introduced smart risk control instruments to boost the domestic financial sector in optimizing risk management.
The opening up of services was deepened. In pursuit of international vision and global operations, ICBC has been actively assuming its responsibilities to serve and get involved into the new pattern of development. In the first half of the year, its overseas institutions maintained a growing momentum, reporting pre-tax profit of USD2.32 billion , up 7.2% year on year. Asset quality remained resilient. The Bank fulfilled the responsibilities as the Chair organization of BRICS Business Council Chinese Chapter, and promoted the implementation of pragmatic cooperation among the five BRICS countries. International financial collaboration was developed. To be specific, the Belt and Road Inter-bank Regular Cooperation Mechanism (BRBR) were expanded to 157 financial institutions in 71 countries and regions. The China-EU Business Alliance mechanism was improved. In the first half of the year, 26 new member enterprises were added, making the total number rising to 78, of which 37 were Fortune Global 500 companies, signaling increasing international influence.