Industrial and Commercial Bank of China Limited (ICBC, Stock codes: SH: 601398, HK: 1398) announced its 2015 annual results today. According to the International Financial Reporting Standards (“IFRS”), ICBC recorded a pre-provision profit of RMB450.2 billion for 2015, achieving a handsome profit growth with year-one-year growth rate of 7.6%. Net profit increased to RMB277.7 billion with year-on-year growth of 0.5% over the previous year.
According to a resolution passed by the Board of Directors, ICBC’s total cash dividend is expected to reach RMB83.15 billion in 2015, of which the pre-tax dividend per 10 shares amounted to RMB2.333. Since its listing, ICBC has maintained a stable cash dividend distribution, with a cumulative cash dividend amounting to RMB646.5 billion for its shareholders. It is the company with the highest dividend payment amount listed in A share market since 2007. Since 2008, its cash dividend rate has continued to be higher than the one-year fixed deposit rate of the same period for 8 consecutive years and secured a leading position among all listed companies in the world. In 2015, ICBC was awarded as the “Best Global Emerging Market Bank” by the UK’s Euromoney magazine, the first financial institution in Asia obtaining this honor. ICBC was also ranked among the firsts in the list of the “Top 1000 World Banks” by the British Banker，"Forbes Global 2000” by the US Forbes, and Fortune’s top 500 commercial banks sub-list for 3 consecutive years.
Although earnings was affected by a combination of factors such as the materialization of potential risk under the economic restructuring and the narrowing of interest margin arising from interest rate liberalization, ICBC continued to improve its business operations to better serve the improvement of the quality and efficiency of the real economy, with focus on revitalizing existing credit lines, maximizing the utilization of its increment, enhancing the strength of the structural adjustment, and striving to optimize business structure as well as to nurture new growth points in the transformation, upgrading and development of the economy so as to maintain stable operations and steady profit growth. All in all, these are broadly reflected in five aspects of its operation and management as listed below:
Firstly, The Bank supported the development of the real economy timely and effectively, and optimized the structure of its financing operations , through a consolidated management of the inventory and increment of credits as well as credit and non-credit financing businesses.
In 2015, the total credit line released by ICBC was RMB2.76 trillion, including domestic RMB loan of RMB880.8 billion with a year-on-year growth rate of 9.1%. The re-lending of retrieved existing loans of RMB1.88 trillion, more than 2 times of the amount of the annual credit increment, has improved the credit turnover rate, optimized the credit structure, and saved capital for the running of credit business, which also effectively supported the upgrading and transformation of the economy. ICBC achieved a total non-credit financing of RMB1.36 trillion including bond underwriting, asset transactions, financial leasing, syndicated loan distribution and entrusted loan etc., with a year-on-year increase of RMB232 billion. Such non-credit financing not only met the corporate financing demand and diversified financial need promptly and effectively, but also accelerated the Bank’s shift from a big asset-holding bank to a less capital-based bank with heavy asset flows.
In terms of the direction of credit release, the ICBC leveraged the significant opportunities in the “Three Supporting Belts” strategy, including the “Belt and Road” initiative, the integrated development of the Beijing-Tianjin-Hebei region and the Yangtze River Economic Belt, to provide services for key programs and major projects with a cumulative loan granted amounting to RMB816.8 billion. ICBC cumulatively provided support to 170 “going global” projects with total loans of USD42.7 billion. The Bank established an innovative online financing center and personal credit consumer finance center, integrating offline professional operation with online standardized operations based on the internet concept and big data technology to proactively serve the mass entrepreneurship and innovation drive as well as the expansion and upgrading of consumption. During the year, ICBC extended RMB161.7 billion in loans to small and micro enterprises, representing a year-on-year growth rate of 9.4%, higher than the average growth rate of the total loan, and the outstanding loans to SMEs reached RMB1.88 trillion. New personal consumption and housing mortgage loans increased by RMB436.5 billion, accounting for 55.4% of the total new loans.
Secondly, the Bank enhanced risk prevention and management in key areas ,maintaining stable asset quality.
In recent years, the complicated changes in international and domestic economic and financial situations have brought new challenges and pressure to the banks in maintainging the stability of asset quality. In response to these challenges, ICBC continued to strengthen and improve the risk management, combined the traditional risk management experience and big data technology to achieve dynamic risk monitoring and real-time warning of all customers, products, and processes., and motivated the whole Bank to timely control potential risks and prevent loan deterioration. The Bank established a specialized professional team to dispose non-performing assets and has taken a variety of measures to accelerate the disposal process. As to the various new types of financial risks such as asset management and agency investment, the Bank further improved the investment and financing risk management mechanisms on the whole market, all products and all channels, focusing on strengthening the penetrating management of the underlying assets and implementing normalized stress tests to effectively avoid cross-infection of risks. As of the end of 2015, the Bank’s NPL ratio was 1.5% with a year-on-year increase of 0.37 percentage points, maintaining its asset quality at a satisfying level compared with its domestic and international peers.
Thirdly, a new batch of earnings growth poles and growth points emerged amid the continuous materialization of transformation and innovation.
In 2015, ICBC’s new type of retail financial services, financial market business, asset management business and investment banking business continued to expand along with the development of a two-way liberalization of finance and multi-tiered capital market. They have achieved tremendous growth and provided important support to profit growth. In recent years, retail finance, as the traditional business of the Bank with competitive advantages, has developed rapidly through continuous innovation and functioned as profitability stabilizer amid economic cyclical fluctuations. The Bank’s total personal financial assets reached RMB11.6 trillion. 750 million bank cards were issued including 109 million credit cards, ranking first in Asia-Pacific region. The number of private banking customers reached 62,000 with a 45% increase and assets under management broke the RMB1 trillion threshold for the first time. Asset management business, as the strategic focus of innovation and development, witnessed steady development with a strong growing potential and its contribution percentage in terms of revenue increased steadily. Total balance of wealth management product of the Bank achieved a 32% increase to RMB2.62 trillion and was the largest in the industry. Asset under custody amounted to RMB11.5 trillion with a growth rate of around 100%, maintaining the No.1 position in the industry. The transaction amount and trading volume of the Bank’s precious metals reached RMB1.25 trillion and 159,000 tons, up by 21% and 38% respectively. In the investment banking field, ICBC continued to optimize business structure and increase market influence. According to Thomson Reuters M&A rankings, the Bank ranked the first in terms of the number of financial advising services for M&A transactions in Asia- Pacific region, and the first in the world in terms of Chinese enterprises’ overseas acquisitions.
Fourthly, as internet-based finance grew rapidly based on three platforms and one center, ICBC’s new advantages of the new types of operations are forming at a faster pace.
In 2015, ICBC launched the e-ICBC brand and upgraded its development strategies. The structure of the internet-based finance, with the main substance of “three platforms and one center” (the direct banking platform, ICBC e-buy e-commerce platform, the instant messaging platform “e-Connect” and internet financing center) was established covering and connecting financial services, e-commerce and social life. With the current 190 million customer base, the direct banking platform was established via the combination of online banking and mobile banking. The annual transaction volume of ICBC e-buy exceeded RMB800 billion. The Bank has completed the strategic layout of ICBC e-Connect, a social financial service platform, and planned to provide communication and financial services to more customers in 2016. The online financing center and personal credit consumer finance center were established to launch the standardized and internet-based credit business. Currently, the total scale of online financing exceeded RMB500 billion.
Fifthly, contribution from globalized and integrated operation grew significantly.
In 2015, ICBC took further step on internationalization by opening new branches in Saudi Arabia, Myanmar and Mexico, becoming the first Chinese bank with footprint in these areas. The Bank completed the acquisition of the share of Standard Bank PLC and share transfer of Tekstilbank, officially making a presence in the global commodity and currency market. In 2015, the Bank also obtained the qualification as the clearing bank for RMB in Thailand and Argentina, implying that its global RMB clearing network, across three time zones including Asia, Europe and America, has been created on top of the existing presence in Singapore, Luxembourg, Canada and Qatar. As of the end of 2015, the Bank has established 404 institutions in 42 countries or regions, with 123 institutions in 18 countries and regions along the “Belt and Road”. Furthermore, the Bank extended its reach to 20 African countries through share investment in Standard Bank in South Africa and established agent bank relationship with 1611 overseas banks in 147 countries and regions. The pre-tax profit of overseas institutions amounted to US$3.166 billion, and the net profit of those insttituitons (the newly acquired within the year exclueded) achieved a year-on-year increase of 12.2%.
The Bank has established a financial service platform covering multiple markets and providing diversified financial services including commercial banks, funds, leasing, insurance and investment banking. The aggregate profit growth of subsidiaries including funds, insurance and leasing reached 55.4%, further reflecting the advantages of diversified operation. ICBC Leasing had total assets of RMB298.7 billion, actively serving the “Belt & Road” initiative and international capacity cooperation. ICBC-AXA had total assets of RMB66.5 billion, maintaining the leading position among foreign and bank-related life insurance companies. The total assets managed by ICBC Credit Suisse Asset Management exceeded RMB950 billion, representing a substantial growth of 62%.