27 August 2015 – Industrial and Commercial Bank of China Limited (“ICBC” or “the Bank”; stock codes SH:601398, HK: 1398) announced today its interim results for the six months ended 30 June 2015. In accordance with the International Financial Reporting Standards, ICBC posted a pre-provision profit of RMB236.6 billion for the first half of 2015, representing a healthy growth of 8.4% from the same period last year. After making a provision of RMB17.8 billion more than the increment of the corresponding period last year, the Bank realized a net profit of RMB149.4 billion, up 0.7% over the corresponding period of the preceding year.
In the first half of 2015, against the backdrop of a series of rate cuts and adjustments made in the floating range of deposit interest rates in the market, ICBC strived ahead to improve its asset-liability structure as well as capital efficiency both domestically and abroad. As a result, the Bank’s net interest income grew by 6.1% year-on-year. Concurrently, leveraging innovation in intermediary business while at the same time standardizing and streamlining the array of chargeable services, net fee and commission income also achieved a year-on-year increase of 5.3%. The acceleration of comprehensive management and overseas development has provided significant momentum for profit growth, with the Bank’s diversified subsidiaries registering strong surge in net profit of 40.1% year-on-year. Pre-tax profit of overseas institutions also rose by 13%. All in all, the results for the first half of 2015 are broadly reflected in five aspects as listed below:
First, innovation in the Bank’s credit operation and management played a part in promoting efficiency of the real economy as well as its business development.
In the first half of 2015, new loans in RMB and foreign currencies of ICBC increased by RMB615.8 billion, and the balance of loans grew by 5.6% compared with the end of last year. Loans disbursed amounted to RMB4.65 trillion, representing 8 times the value of new loans. Of which, re-lending of retrieved existing loans stood at RMB1.02 trillion, and the aggregate amount of newly effective credit grants reached RMB1.6 trillion upon inclusion of the new loans. At the same time, backed by innovation-based development, ICBC actively upgraded its financing services and utilized diversified approaches encompassing “commercial banking + investment banking + leasing”, “credit + non-credit”, “on-balance sheet + off-balance sheet", as well as “domestic + overseas” to better cater for the different needs of the real economy. Non-credit financing, including bond underwriting, financial leasing and entrusted loans, amounted to RMB521.5 billion. During the period under review, ICBC underwrote debt financing instruments amounting to RMB384.3 billion as the lead manager, taking up the number one position in the industry. Furthermore, it was named the top lead manager and book runner in Asia Pacific, arranging syndicated loans up to RMB271.5 billion in mainland China.
On the fund orientation front, ICBC put its emphasis on the key fields and weak links in the latest economic development scene, providing full support to China’s key project construction and sector restructuring. Financing for the “Three Supporting Belts” (namely the Belt and Road Initiative, Beijing- Tianjin-Hebei Integrated Development Program, and the Yangtze River Economic Belt) amounted to RMB230 billion, whereas another RMB174.9 billion of new loans went to “Made in China 2025”, strategic emerging industries, modern service industry, cultural industry, and modern agriculture. Additionally, with a move to back consumer spending expansion and consumption upgrade, ICBC took the initiative to open a brand-new personal credit consumption financial center. Personal consumption and residential mortgage loans increased by RMB183.9 billion, or up RMB16.9 billion compared with the increment of the same period last year. The Bank also propelled the optimization of special units and related new service model serving small and micro enterprises. Loans to small and micro enterprises increased by RMB105..6 billion, with the balance of loans growing by 6.13% compared with the end of last year. Personal loan customers increased by 21,600 compared with the corresponding period of last year. Loan acquisition rate was lifted further to 91%, meeting the three “no lower than” requirements as laid down by the regulatory bodies concerned.
Second, the Bank enhanced risk prevention and control in key fields on all fronts with speedy formation of new risk management system adapted to the new normal in economy and new financial environment.
With the Chinese economy undergoing a “triple transition” and facing increasing exposure to potential risks, ICBC advanced ahead to adjust its credit structure to stem risk formation, deepening the transformation of the Bank’s credit operation and management to ever solidify the foundation of its credit risk management. As at the end of 30 June 2015, the Bank’s non-performing loan (NPL) ratio stood at 1.4%, up 0.27 percentage point over the end of 2014. Asset quality remained at a favorable level as compared with its peers both domestically and globally. With a view to coping with pressure brought about by deteriorating credit asset quality, ICBC actively optimized its risk monitoring system leveraging big data and its collaborative mechanism involving all levels for risk disposal. New precautionary measures were further taken to mitigate potential risks. The Bank has in place a professional team to dispose of special assets, and by multiple means, the Bank reaped in satisfactory results in lowering material risks and increasing related efficiency of recovery and disposal. This translated into a total recovered NPL of RMB73.4 billion in the first half of 2015. The Bank also endeavoured to enhance the management of overdue loans and loans carrying potential risks, and recovered risky loan financing of RMB233 billion.
In terms of loans to local government financing vehicles (LGFVs), and for the real estate sector and industries with over-capacity that arouse considerable market concern, ICBC’s credit risks in those fields are on a continuous decline. With regards to LGFVs, the Bank maintained a strict control over new financing disbursements and strengthened the monitoring of its financing operation, with a move to effectively manage the loans structured through the financing platform. The loans to LGFVs were reduced by RMB17.38 billion over the end of last year. In the real estate development sector, ICBC focused its support on premium commercial housing and indemnificatory housing projects undertaken by large developers and optimized its real estate loan products in terms of types and geographic mix, with the NPL ratio standing at 0.77%. The balance of loans to five sectors suffering from serious over-capacity, spanning from steel, electrolytic aluminum, cement, to sheet glass and naval architecture, reduced by RMB120 million over the end of last year. The NPL ratio was down by 0.15 percentage point.
Third, vigorous new growth points emerged amid transformation and innovation, leading to increasingly diversified growth drivers for operational development.
In the first half of 2015, ICBC proactively responded to customer demands and the changing landscape for the deposits segment, achieving the highest growth in deposits in the last three years. Aggregate deposits increased by RMB1.7 trillion, up RMB564.1 billion compared with the increment of the corresponding period last year. Innovation of active liability business accelerated with an issuance of 54.1 billion worth of CDs. Total financial assets of personal customers exceeded RMB11 trillion. Retail banking accounted for close to 40% of the total business contribution, up 2.55 percentage points compared to the same period last year, and further deployed its strong countercyclical characteristics and ability to generate stable profit contribution. Riding on promotion of innovations in products, services and channels, ICBC enjoyed rapid growth in various emerging businesses. A total of 710 million bank cards have been issued, up 43.88 million, with card-based consumption volume increasing by 15.1% to over RMB4 trillion. During the period under review, the number of private banking customers increased by 10,400, and total assets under management grew by 23.7% from last yearend to RMB910 billion. At the same time, net custodian assets exceeded RMB6.5 trillion, up 12.1% compared to the end of last year, maintaining the Bank’s position as the largest custodian bank in China. The balance of wealth management products surpassed RMB2.1 trillion, up 7.9% compared to the end of last year, cementing its largest asset manager status in the domestic market. Major products of investment banking business such as mergers and acquisitions and equity financing continued to maintain its fast growth leveraging rapid development for many years, with related income rising further by 36% and 24%, respectively, year-on-year.
Fourth, Internet financing business encompassing three platforms and three product lines registered fast and strong growth, becoming a new driver to promote operational transformation and business development.
In the first half of 2015, embracing the historical opportunity of "Internet +" that expedites the formation of new economic mode, ICBC gave full play to the advantages of its credibility as well as technological and financial capabilities to accelerate the implementation of its internet financing strategy. Buttressed by three platforms (the ICBC E-buy” e-commerce platform, the “ICBC eConnect” instant communication platform and ICBC direct banking platform) and three product lines (payment products, financing products and financial investment products), the Bank’s internet financing business achieved scale effect and explosive growth, becoming a brand-new engine of promoting operational transformation and business development.
As the end of the first half, the gross merchandise value of the “ICBC E-buy” e-commerce platform exceeded RMB204.4 billion, representing an increase of 26.8 times year-on-year. The platform has swiftly developed into a comprehensively integrated e-commerce platform covering B2C, B2B and B2G businesses. Cumulative registered users of the “ICBC eConnect” instant communication platform reached to 1.3 million. Total transaction amount of the ICBC direct banking platform broke the RMB23 billion mark, representing an accelerating trend all-in-all. “ICBC E-payment”, an instant payment product, saw its customer accounts surpass 60 million and transaction amount exceed RMB80 billion, up 5.4 times as compared to the corresponding period last year, as well as a trading capacity hitting over ten million transactions a second that tops the industry. The balance of ICBC’s “Easy Loan”, a personal credit loan product based on O2O direct consumption, surged beyond RMB190 billion. "Online Revolving Loan", an internet-based financing product tailored for small and micro enterprises, has dealt out an aggregate of RMB1.73 trillion of loans to over 70,000 clients thus far with the balance reaching more than RMB200 billion, which makes it the largest internet finance product in terms of single loan volume in China. Cumulative loan volume of the online "Personal Self-service Pledge Loan" amounted to RMB38.2 billion with the balance exceeding RMB24.7 billion. The online investment trading business such as the account-based precious metals, crude oil, basic metals and agricultural products grew rapidly. For instance, the trading volume of the account-based crude oil reached RMB56.7 billion, increasing by 30.5 times year-on-year. “E-lingtong”, a financing product implementing real time T+0 application and redemption, maintained steady growth and was well received by customers.
Fifth, Contribution of internationalized and comprehensive operation to the Group unveiled gradually
In the first half 2015, ICBC continued to steadily promote its internationalized and comprehensive operation, with the aim of strengthening its financial support to Chinese corporations’ “going global” and the Belt and Road initiative. ICBC’s global service network was approaching complete, with the official opening of the Riyadh branch, the licence acquirement by the Yangon branch, the renaming of Standard Bank Plc into ICBC Standard Bank Plc upon the completion of acquisition of a 60% stake in the former, and the completion of acquisition of a 75.5% interest in Turkish Tekstilbank. The Bank’s core market penetration and level of localization was fortified further. As at 30 June 2015, ICBC’s overseas network reached out to 42 countries and territories across the globe with 399 institutions. It indirectly covers 20 countries in Africa through holdings in Standard Bank Plc,,and established agent relationships with 1,604 overseas banks in 147 countries and regions. The assets of the Bank’s overseas institutions reached approximately USD270 billion, a growth of 14% compared to the end of 2014. Pre-tax profit reached USD1.706 billion, an increase of 13% year-on-year.
The Bank’s diversified subsidiaries continued to contribute to the profit contribution and strategic synergy effect to the Group. ICBC Credit Suisse Asset Management capitalized on the opportunities offered by the optimization of the multi-facet capital markets, bringing in full play its role as a comprehensive asset management platform. As at the end of the first half 2015, the assets under its management hit RMB754 billion, an increase of 28% compared to end of 2014. ICBC Leasing penetrated further both the international and domestic markets, as well as certain key industry fields. Its assets soared to RMB268 billion, staying firm as the top leader in its league. ICBC-AXA progressed well with its regular business transformation. Its business scale and market share trended higher during the period under review. Premium Income reached nearly RMB15 billion, an increase of 93.5% year on year.