ICBC's trade finance business continues to grow at an impressive pace as year 2011 starts. During the first quarter, domestic branches disbursed an aggregate of nearly RMB 290 billion of in-balance sheet trade financing, up 42.58 percent year on year or RMB 85 billion. With a domestic outstanding in-balance sheet trade financing to more than RMB 527 billion by the end of March, ICBC remains as the largest trade finance bank in the country. Of which, performance on international trade financing catches the attention of all. In the January to March period, the Bank's domestic branches granted nearly USD 30 billion of international trade financing, up 160.27 percent year on year, sitting at the top of the domestic ranking. Meanwhile, ICBC's overseas branches conducted more than USD 16 billion of international trade financing, up over 100 percent when compared to the same period last year.

While making fast progress on the business, ICBC also strengthens risk control of trade finance from three metrics: transaction, customer and guarantee, with special emphasis on the follow-up and monitoring on logistics, documentary flow and capital flow to effectively prevent credit risk. At the end of the first quarter this year, non-performing rate of in-balance sheet items in domestic and international trade financing were only 0.33% and 0.27% respectively.

Industry insiders said that, the prosperous growth of trade finance business in ICBC or other commercial banks fully demonstrates the strong intrinsic drive of China's real economy development on the back of trade finance's real trading background. When compared to conventional loan business, trade finance is now a business area that all commercial banks vying for due to its distinctive features: lower risks, good liquidity, high overall return, saving in economic capital and broad market potential. In the face of fierce market competition, ICBC takes maximum standing of its settlement network and rich customer resources to loom large trade finance business as one strategic measure to re-orient its business model and development pattern. The Bank began from product innovation, management process, marketing and promotion to improve customer service level and market competitiveness to build its dominant position in the business.

First, ICBC works on two fronts. On the one hand is the launch of "1+N" marketing. By staying close to the transaction chain around the key enterprises, target customers are extended to small-and-medium enterprises (SME) that have rich trade experience, reliable trading channel, good record on fulfillment of legal contract, stable logistics and cash flow. Credit facilities are provided to key enterprises and their upstream/downstream counterparties in a bid to tightly combine bank facility with enterprise supply chain, and to effectively control the capital flow and risk. On the other hand is to cater for the fast growth amid the globalization of Chinese large corporations and trading with China from foreign conglomerates. ICBC fully leverages its global network to expand aggressively the financing service to global customers and their upstream/downstream companies in the supply chain. Especially after all the joint marketing efforts between domestic and overseas branches, trade finance is now a major business growth point for ICBC's overseas subsidiaries.

Citing ICBC Singapore Branch as an example. By dint of the good relationship between ICBC Group and four large oil companies: Petrochina, Sinopec, CNOOC and Sinochem. Singapore is a major international entrepot trade center for oil and fuel. Singapore Branch takes this specific geographical advantage to extend ICBC financial services to seven Singaporean subsidiaries of these four oil companies. The Branch adopts all necessary measures to innovate products and services to drive the delivery of financial services related to oil trade products. The Branch's business volume in international settlement and trade finance accounts for over 80% of all business volume in Singapore's five large Chinese banks. As a result, Singapore Branch has built a base of energy customer group using the Branch's bulk commodity trade finance service. Meanwhile, Singapore Branch successfully wins and builds good partnership with many Chinese multinational companies' regional headquarters in Singapore, such as Legend, Huawei, Midea, Baosteel, driving a fast growth of trade finance. Just in the first quarter of this year, Singapore Branch has settled trade finance transactions to a total of USD 1.61 billion, a year-on-year jump to a staggering 165%. Besides, ICBC starts border trade finance service as a pilot in Guangxi and Yunnan to push the healthy growth of the business, targeting at companies engaging in border trade.
 
ICBC sets up a trade finance solution scheme centered on three large categories of fundamental financing products: account receivables, account payables/prepayment, commodity (goods pledge) in respond to the needs of market and customers for trade finance products. The solution scheme basically covers all the transaction steps, settlement options and business models of customers. In international trade finance, main products are import TT facility, import L/C opening, import documentary bill, forfeiting, export factoring, order financing and export invoice financing. "Service Supermart" is a new service model where functions of settlement, finance and wealth management are freely combined for the delivery of integrated services to customers covering the whole process of international trade and extending to domestic trade's settlement, finance, wealth management and risk management. ICBC also places emphasis on the joint force between domestic and overseas branches. Using its advanced IT platform and overseas operating network, the Bank offers tailored, unique trade finance solutions for globalized customers, lending support to customers to effectively lower capital cost, hedge against exchange rate risk, reduce the financial pressure for external payment and ensure the safety of company account receivables. In 2010, ICBC established closer ties with foreign agency banks on payment services against import. Export finance and import collection/acceptance finance are the pilot services under the joint force between domestic and overseas subsidiaries and warmly welcomed by the customers.

In the innovation on management model and process, ICBC rolls out the authorized approval system for credit rating. ICBC implements credit authorization management different from that for general corporate clients since trading companies have less net assets and high liability ratio, but reliable trading relationship and stable logistics and cash flow. Independent measures are instituted to grant credit to trading enterprises using sales revenue, operating cash flow as the key. Focus is on the conditions such as counterparties, commodity traded, cooperation relationship and contract performance record, with necessary expansion in authorization scope, optimization, consolidation and streamlining of business processes (credit rating, credit authorization, evaluation of pledge and business approval). Business steps are streamlined to improve the speed and efficiency in response to the customer need, and better align with the high frequency and strong timeliness of trade finance service.

When compared to the massive trade scale in China, trade finance business is still an emerging market not yet fully developed and of huge potential, said an executive with ICBC. In the days ahead, ICBC will fully capitalize this opportunity to move aggressively trade finance business, especially in product and technological innovation. Conscious effort will be spent to expand customer groups, nurture a team of professional staff well-versed in trade finance operation and management, and seek a professional management model and operation mechanism for trade finance business. The Bank aims to be a world-class trade finance bank.