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Industrial and Commercial Bank of China Limited Announces 2017 Annual Results
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Industrial and Commercial Bank of China Limited (ICBC, Stock codes: SH: 601398, HK: 1398) announced its 2017 annual results on 27 March 2018. According to the annual report, ICBC achieved sound business performance in 2017 with constructive interaction among its total volumes, structure and quality, presenting a satisfactory performance sheet with several highlights.

According to the International Financial Reporting Standards (“IFRS”), ICBC recorded a net profit of RMB287.5 billion for 2017, achieving stable profit growth with a year-on-year growth rate of 3%. The Bank continued to hold the largest net profit base in the global banking industry. Pre-provision profit, which reflects business growth, reached RMB492.4 billion, representing an increase of 9.1% over the previous year. The NPL ratio, overdue loan ratio, loan deterioration ratio, scissors difference and other KPIs gradually improved quarter by quarter, showing a significant improvement in asset quality, with the NPL ratio down by 0.07 percentage point to 1.55% and allowance to NPL greatly up by 17.38 percentage points to 154.07% over the previous year. By virtue of a solid profitability, the net interest margin (NIM) was 2.22%, showing an increase of 6 bps from last year. Mega retail and financial market business made significant contributions with accelerated transformation of growth drivers of intermediary services. Overseas and controlled institutions reported growth of 12.6% in net profit, further consolidating the profit structure with coordinated and balanced growth. The cost-to-income ratio was 26.5%, reflecting outstanding cost control management among the industry peers. Leveraging the further enhancement in market competitiveness, customer deposits increased by RMB1.4 trillion or 7.9% from last year, leading the industry in terms of the increased amount and the growth rate among comparable peers. In particular, the increased amount from demand deposits accounted for 66.6% of all the deposit increment. Corporate deposits increased by RMB1.11 trillion, enabling the Bank to become the only bank with the increased amount of corporate deposits exceeding RMB1 trillion in the market. With the further implementation of the strategies for key municipal branches, the Bank further strengthened its competiveness in key markets.

As resolved by the Board of Directors, the cash dividend to be distributed by ICBC for 2017 is expected to be RMB85.823 billion, of which the pre-tax dividend per 10 shares amounted to RMB2.408. Since its listing, ICBC has been the company with highest dividend payment amount in the A share market for ten consecutive years, creating cash dividend returns of over RMB800 billion in aggregate for its shareholders. The Bank was also ranked the 1st place among the Top 1000 World Banks by The Banker and ranked the 1st place in the Global 2000 listed by Forbes for the fifth consecutive year, with its brand value staying at the 1st place in the global financial industry.

In 2017, facing the challenges as evidenced by the further implementation of interest rate liberalization, frequent occurrence of various risks, accelerated financial disintermediation and the intensified competition among banks and companies from other sectors, ICBC maintained a clear mind with strategic persistence as always and made overall arrangements for strengthening the real economy, controlling risks and promoting reform. The Bank attained business performance results which was better than those as planned and expected before and better than those in the same period last year, thereby maintaining stable and progressing development momentum. All in all, these are broadly reflected in four aspects of its operation as listed below:

Firstly, the Bank adhered to its ultimate mission in the financial sector and regarded serving the real economy as its foundation of operation.

In 2017, focusing on supporting the development of the real economy and the supply-side structural reform, ICBC enhanced the investment and financing integrated service mechanism and business layout and put special efforts into improving the availability of financial services, achieving a virtuous cycle of serving the real economy and facilitating its own development.

Further implementation of the integrated development of investment and financing - The Bank further implemented consolidated management of existing and new loans. New loans actually granted by domestic branches during the year totaled RMB2.8 trillion, including RMB1.87 trillion that were recovered. New non-credit financing amounted to over RMB1 trillion, making a variety of fund sources available to the real economy at lower costs.

Strong support for national key initiatives and major projects - The Bank made active efforts to serve “the 13th Five-Year Plan”, “four regions”, “three supporting belts” and the construction of the Xiong’an New Area by issuing cumulatively RMB1.14 trillion worth of project loans, up RMB193 billion from the same period of last year. The Bank lent USD33.9 billion to 123 “Going Global” projects and issued green bonds for the “Belt and Road” initiative. The regular cooperation mechanism among banks under the “Belt and Road” initiative initiated by the Bank became one of the official achievements at the “Belt and Road” Forum for International Cooperation.

Big push to the development of inclusive finance - The Bank showed its due attitude by setting up the Inclusive Finance Department and supporting small and micro enterprises, farmers, agriculture and the countryside, mass entrepreneurship and innovation, poverty alleviation and other sectors. Outstanding loans to small and micro enterprises amounted to RMB2.2 trillion, representing an increase of 9% from last year. The Bank grew to become the largest lender for small and micro enterprises in China. With the active support for the rural revitalization strategy, outstanding loans to the agricultural sector amounted to nearly RMB1.9 trillion. Outstanding loans for targeted poverty alleviation amounted to RMB127 billion. By setting up an anti-poverty fund amounting to RMB17.3 billion, the Bank provided support for 20 poverty-stricken villages and towns in respect of infrastructure construction, rural environment management, public services and improvement in the living environment.

Better serving the supply-side structural reform - The Bank supported the initiative to cut overcapacity in a proper and orderly manner to reduce the financial resource utilization of “low-efficiency areas”. Insisting on the positioning of “houses are for living, not for speculating”, the Bank supported destocking based on the situation of different cities and the reasonable demand of funding for first-time homebuyers and better housing. The Bank took multi-pronged measures to support deleveraging and set up ICBC Investment to promote market-based debt-for-equity swap under the guidance of laws, helping enterprises bring leverage down with improved quality and efficiency.

Secondly, the Bank adhered to the principle of sound operation and regarded the prevention of financial risks as the background of operation.

In 2017, ICBC further strengthened its risk prevention and the control of the in- and off- balance sheets so as to enhance the management of the source of risks and precise risk mitigation, serving as a cornerstone as a large-scale bank in safeguarding the economic and financial environment.

Accelerated construction of the new credit management mechanism in line with the new normal - Highlighting the active management of credit risk, the Bank controlled new risks, prevented deterioration and optimized risk disposal while implementing radical measures such as guidance in credit culture, system and mechanism reforms as well as loan governance with experts and professionals. NPL ratio continued to decline. Scissors difference even dropped by over 50%. Overdue loan ratio and loan deterioration ratio decreased by 64 bps and 49 bps year on year respectively. Since 2013, the NPL ratio of new financing was controlled at 0.89%, which effectively mitigated potentially risky financing. The Bank collected and disposed of non-performing loans of RMB192.7 billion during the year. The collection and disposal rate continued to rise, which further consolidated the foundation of asset quality.

Strengthened management of cross-border, cross-industry, cross-market and other new risks - The Bank further improved the whole-chain, full-category and all-inclusive risk management system for the final gatekeeping of crossed risks. According to the principle of “simple, transparent and controllable”, the Bank regulated the development of asset management, interbank, notes and other cross-market businesses.
The Bank carried out internal rating of country risk and sovereign risk on about 150 economies across the world and established a prudent country quota management system. The Bank also applied big data and other technologies in risk management more extensively. In 2017, the Bank, by means of the external fraud risk information system, intercepted more than 1.27 million cases of risky business involving RMB5.1 billion, which effectively protected the customers’ rights and interests.

Thirdly, the Bank focused on the sustainability of business and regarded accelerating transformation and innovation as the drivers of operation.

In 2017, ICBC pushed further in the constructive and mutual facilitation between traditional business and emerging business, domestic and overseas organic interaction and integrated development of banking and non-banking businesses, to build a profit growth pattern with hybrid power and multiple engines which further consolidated multi-source power and multi-point support.

Further implementation of mega retail, mega asset management and mega investment bank strategies - Focusing on all customers, the business model of mega retail was further enhanced, registering a net increase of 38 million personal customers. In particular, the number of credit card customers reached 88.59 million. The Bank became the largest credit card issuing bank in terms of customer number in China. Mega asset management and mega investment bank business adapted to the changes in the regulatory requirements and the regulatory environment and maintained robust development. In particular, income from asset management business increased by 8.6%. The Bank completed about 1,500 investment banking projects, and reported outstanding M&A loans close to RMB219.5 billion, being ranked first in the Asia Pacific region in terms of the number of M&A transactions participated in for the fourth consecutive year.

Accelerated deployment in the field of financial technologies - According to the law of Internet development and financial services, the bank focused on the construction of “intelligent banking” and accelerated the innovation of financial technologies. The Bank set up the Internet Finance Department and seven innovation labs to accelerate the launch of the e-ICBC 3.0 strategy. Registered users of the mobile banking platform “ICBC Mobile” reached 280 million, representing growth of 11.5%. Registered users of the instant messaging platform “ICBC Link” increased by 71.5% to 114 million. The value of transactions over the e-commerce platform “ICBC Mall” swelled to RMB1.03 trillion. Internet financing expanded to over RMB840 billion, making the Bank still the largest internet financing bank in China.

Steady progress in internationalized and diversified development - As of the end of 2017, ICBC had established 419 overseas institutions in 45 countries and regions. In particular, the Bank maintained 129 institutions in countries and regions along the “Belt and Road”. The total assets of overseas institutions amounted to USD358.6 billion, representing year-on-year growth of 17%. Net profit amounted to USD3.15 billion, representing year-on-year growth of 23.5%. If the overseas institutions of ICBC were regarded as an independent bank, its ranking in terms of profit and assets would rise to the 60th and 57th place among the large banks around the world respectively. Comprehensive subsidiaries delivered stronger profit contributions to the Group. Comprehensive subsidiaries including ICBC Credit Suisse Asset Management, ICBC Leasing, ICBC-AXA and ICBC International recorded net profit of RMB7.3 billion, representing year-on-year growth of 19%.

Fourthly, the Bank adhered to the “People-oriented” concept and regarded strengthening team building as the guarantee of operation.

The key of enduring business is talents. In 2017, ICBC continued to enhance and utilize its advantages in corporate governance and tempered and polished its professional and scientific standards of decision making, in order to build a professional staff team of high quality and lay a foundation for sustainable and healthy development.

Further strengthened professional standards in corporate governance - Fully leveraging the professional advantages of the Board of Directors and the special committees, the Bank kept on improving the efficiency and quality of decision making and made scientific planning on the strategic direction, strategic goal and strategic measures of the Group, and facilitated the foresight of risk management. The Bank accomplished the three-year development plan and formulated the new vision and the new three-year development plan. The Bank strengthened the building up of professional capacity of management personnel at all levels to promote the implementation of strategies.

Implementing the strategies of prospering ICBC and strengthening ICBC with talents in depth - By pushing forward the “311” talent cultivation plan, the Bank further strengthened its competitive advantages in terms of talents in its advantageous services, emerging services, intelligent banking, internationalization and other sectors. The Bank also continued to optimize the quality and structure of employees. The Bank has optimized staff structure among different levels, business lines and segments since 2016, which involved over 50,000 employees, accounting for more than 11% of the Bank’s talent base. The Bank also continued to establish and improve the career development paths for employees, and vigorously advocated and exercised the “Craftsmanship” mindset. By promoting the construction of a harmonious bank, the Bank created a working environment that help employees be of one heart and with high morale and confidence, injecting an impetus for corporate development.