On April 29, 2019, Industrial and Commercial Bank of China (“ICBC” or the “Bank”, stock codes: SH: 601398, HK: 1398) announced its business results for the first quarter of 2019. According to the results announcement, on the basis of its good business performance in 2018, ICBC maintained a steady progress with key indicators better than the same period of last year and leading the market in the first quarter of 2019. Pursuant to the International Financial Reporting Standards (IFRSs), ICBC posted a net profit of RMB82.69 billion for the first quarter, an increase of 4.58% year on year. Both operating income and pre-provision profit reflecting profitability saw double-digit growth of 10.17% and 12.46% respectively. Its net fee and commission income was RMB46.1 billion, up 10.87% from a year earlier. The provision coverage ratio increased by 10.09 percentage points to 185.85% from the end of the previous year, and the non-performing loan ratio declined for the ninth consecutive quarter by 0.01 percentage points from the beginning of the year to 1.51%. Thanks to its improved service, innovation and risk management capability, ICBC constantly made new achievements in serving the real economy, market expansion and business transformation in the first quarter. The characteristics were mainly shown in the following four aspects:
First, ICBC granted loans in a stable and efficient manner to effectively serve the real economy. In the first quarter, the RMB loans granted by ICBC’s domestic branches increased by RMB492.1 billion or 3.62% from the end of the previous year, with the equilibrium rate of loans (76%) ranking among the best. The sum of non-credit financing and investment in local government debt grew by RMB221.8 billion. Loans were granted to accurately meet the demands of the real economy, which focused on major economic and social projects and the areas related to people's livelihood, and gave priority to meet the funding demands of major strategic projects of “Four Segments”, “Three Supporting Belts”, Xiongan New District, Guangdong-Hong Kong-Macao Greater Bay Area, as well as small and micro enterprises. Specifically, the newly increased medium- and long-term corporate loans accounted for 92% of all new corporate loans, and the loans granted to the manufacturing industry rose by RMB48.4 billion from the beginning of the year, helping stabilize employment, investment, and growth. The loans to happiness Industry, advanced manufacturing, connectivity of Internet of Things (IoT), which served as new engines to drive the economy, grew by RMB70.9 billion over the beginning of the year, accounting for 21% of the new corporate loans of the Bank. The accumulative loans to projects under the Belt and Road Initiative (BRI) exceeded USD100 billion, and the world’s first green BRI inter-bank regular cooperation bond was successfully issued by the Bank. The measures for serving private and small and micro enterprises were implemented at a faster pace and good results were achieved. In the first quarter, corporate loans granted by ICBC to private enterprises increased by RMB109.6 billion from the beginning of the year. The balance of the Bank’s loans stood at RMB368.3 billion in terms of inclusive finance as defined by China Banking and Insurance Regulatory Commission, an increase of RMB58.2 billion or 19% from the beginning of the year, which was 3.6 times as high as that of the previous year. The balance of the Bank’s inclusive loans recorded RMB385.2 billion in terms of the reserve requirement ratio cut of the People’s Bank of China, up RMB62.3 billion or 19% from the beginning of the year.
Second, ICBC continually strengthened its customer base to enhance market competitiveness. In the first quarter, ICBC kept strengthening customer development and service improvement, increasing 10 million personal customers, 250,000 corporate customers, and 13 million Internet finance users. Motivated by the larger customer base and innovation in products and services, ICBC’s new customer deposits grew by RMB1.16 trillion or 5.45% from the end of the previous year, and it managed to lead the industry in attracting new customer deposits and total deposits. In particular, personal deposits increased by RMB771.2 billion from the beginning of the year.
Third, ICBC continued to enhance its asset quality and risk compensation capacity. In the first quarter, ICBC continued to intensify its asset quality management and control as well as comprehensive risk management, so as to make steady improvement in the asset quality. As of the end of March, ICBC’s overdue loan ratio and scissors difference between overdue loans and non-performing loans declined for 11 consecutive quarters, which fell to RMB34 billion. Through proactive control of potential risks, ICBC saw the balance of potential risk financing decline for 12 consecutive quarters. The disposal and recovery of non-performing loans continued to be improved, and the provision coverage ratio rose to 185.85%.
Fourth, ICBC deepened transformation and innovation to further enhance business vitality. It benefited more from the mega retail, and ranked first in the increment of both personal deposits and loans. Besides, efforts were made to accelerate the transformation and upgrading of mega asset management and mega investment banking businesses. Meanwhile, the Bank maintained its leading position in wealth management scale and income, with investment banking income up 16.8% year on year. ICBC also maintained good momentum for growth in emerging market businesses. The fee-based business income from credit cards and net profit from financial market increased by 15% and 22% respectively year on year. ICBC’s overseas and controlling institutions contributed more to the profitability. Furthermore, the building of smart banking was advanced in an orderly manner, which covered 98% of the total outlets of the Bank. ICBC has speeded up the application of technologies such as big data, blockchain, IoT, and biometrics to financial products and services so as to further promote its service capacity and customer experience.