In 2009, despite the most challenging economic conditions in the country and worldwide, Industrial and Commercial Bank of China Limited ("ICBC") has weathered the crisis by taking steps in business re-orientation and service innovation, maintaining good portfolio balance and cost control. The measures have helped ICBC effectively ride through the negative effect brought by the global financial crisis and the slow recovery of China's economy. ICBC looked at the crisis as an opportunity and has come out stronger; growth was phenomenal with historic progress. Corporate governance was far improved.
［Business review］
At the end of 2009, ICBC has 386,723 employees under payroll. ICBC provides a wide range of financial products and services to 3.61 million corporate clients and 216 million individual customers through 16,232 outlets across China, 162 overseas subsidiaries and a global network of more than 1,504 correspondent banks as well as Internet Banking, Telephone Banking and self-service banking. ICBC establishes strong presence by its commercial banking operation and rapid expansion to markets worldwide. ICBC is also a market leader in the country in many business areas of commercial banking.
At the end of 2009, total assets of ICBC went up 20.8% to RMB 11,785.053 billion, total liabilities up 21.4% to RMB 11,106.119 billion. ICBC is the largest bank in the world with a market capitalization of USD 269 billion. Having its provision coverage rate up significantly to 164.41%, ICBC defended its position as the world's most profitable bank, reporting a net profit of RMB129.35 billion. This was a 16.4 percent or RMB 18.199 billion up from 2008. Earnings per share and return on weighted average equity rose respectively 18.2% and 0.75 percentage points from the period ending 2008 to RMB 0.39 and 20.14%. This witnessed another historic jump. Cost-to-income ratio was maintained at reasonable 32.87%. Bad loan balance and ratio both declined in its tenth year. Non-performing loans ratio fell to 1.54 percent. Capital adequacy ratio and core capital adequacy ratio were 12.36% and 9.90% respectively. ICBC kept its capital at a sound level while gathering speed. Income for the year basically leveled with a year earlier to RMB 309.454 billion, ICBC registered a growth of 36.2% in non-interest income to RMB 63.633 billion, operating expense down 13.7% to RMB 143.46 billion, while income tax expenses up 11.0% to RMB 37.898 billion.
ICBC set for global advance and achieved breakthrough in escalating its international presence in 2009. That included the purchase of 70 percent shares of Bank of East Asia Canadian unit, the voluntary tender offer for all shares in Thailand ACL Bank, the merge of Seng Heng Bank and Macau Branch to form ICBC Macau, the opening of Hanoi Branch and the business license received for Abu Dhabi Branch and the subsidiary bank in Malaysia. By the year-end 2009, ICBC beefed up its global services through its operation of 23 subsidiaries in 20 countries and regions and 162 branches in total. The ICBC overseas subsidiaries navigate this downtown well and gather pace by concentrating in business innovation and localization. All of them gain profits and show marked improvement in achieving profitability.
［Corporate Banking］
Data in People's Bank of China shows that ICBC topped the league tables of loans and deposits from corporate clients with market shares of 11.9% and 13.8% respectively as of end of the year. The lending to corporate sector in China grew by 22.5% to RMB 3,957.786 billion, while balance of deposits from domestic companies up 21.6% to RMB 4,788.49 billion. There were 510,000 new corporate clients from the end of 2008 to 3.61 million, 84,000 companies have unsettled loans in ICBC and 8,927 of them were new in 2009.
ICBC has a full range of products in cash management and payment settlement to serve the top-tier corporate customers as well as small-to-medium enterprises. By the year-end 2009, number of corporate settlement accounts surged 640,000 from end of previous year to 4.4 million. ICBC's RMB 668 trillion of settlement for the corporate clients, representing an increase of 28.5%, was the highest volume in the market. ICBC scored 287,026 cash management clients, a jump of 168,275 or 141.7% from the end of previous year. It was the third year in succession that ICBC had been conferred the title of "Best Cash Management Bank (China)" by The Asset, Finance Asia, and "Best RMB Cash Management Services (China)" by Asiamoney.
ICBC stepped up its joint marketing efforts in the offering of financial products and services to small and mid corporate segment. 44,243 small enterprises in China, or a jump of 6,686 in terms of number from end of pervious year, received loans from ICBC by the end of 2009. ICBC was included in Financial Times' ranking of the "Top 10 SME Financial Services Organizations in China" and "Top Ten Commercial Banks for the Support to Small and Medium Enterprises" by the Organizing Committee of China Association for Small & Medium Commercial Enterprises (CASMCE).
In terms of working with insurance companies, ICBC has entered partnership agreements with 52 insurance companies in China. ICBC is sitting at the top with a growth of RMB 196.5 billion of third party depositary funds from the end of previous year to RMB 388 billion. ICBC expanded its domestic network of agency banks by adding 16 to a total of 101 for its bank-to-bank service. Other efforts included the enhancement to Bank-Government system, new guarantee function for online payment of tax in the "Bank-Customs Link" system, launch of collection of non-tax income on behalf of the government and improvement of services to government users.
When it comes to the result of bond underwriting in 2009, ICBC ranked No. 1 in the country by leading underwriting RMB 279 billion of different types of debt instruments for non-financial institutions. Through the release of M&A loans and closer ties with institutions like South African Standard Bank, ICBC fully supported the domestic flagship enterprises of various industries in their overseas mergers and acquisitions. ICBC revenue in 2009 was reported a 56.2% increase over 2008, breaking RMB 10 billion to RMB 12.539 billion. Securities Times named ICBC as the "Best Bank in Investment Banking of China" on account of its strong brand influence.
In the area of trade finance, ICBC moved faster in the innovation of product portfolio and increased its market shares. In the year 2009, all the domestic branches extended trade facility to a tune of RMB 679.7 billion, or grew by 87.6% within the previous 12 months. Out of which, credit facility for domestic trades increased 183.9% to RMB 374.4 billion and up 32.6% to USD 44.7 billion for international trades. In international settlement, ICBC has settled a total of USD 545.9 billion in 2009.
As the business moves ahead, more assets are under ICBC custody. Number of securities investment funds under ICBC custody has increased 38 to 145. Scale of insurance assets under ICBC custody rose nearly 50%. ICBC has the highest number of QFII customers among the Chinese banks and continues to dominate the market in having the largest scale of QDII assets under custody. ICBC was the first to launch "One-to-Many" custody services for fund houses and "One-to-One" for QDII. In terms of total net value, assets under ICBC custody notched up 57.9% increase from the end of previous year to RMB 1,806.5 billion by the end of 2009. In this area, ICBC earned the plaudit of "Best Sub-custodian Bank in China" presented by such financial publications from home and abroad as Global Custodian, The Asset and Global Finance.
ICBC launched "Ruyi Pension II", a brand of standard product on corporate annuity plan where ICBC is the trustee. In 2009, ICBC offered corporate annuity services to 18,320 companies where 2,786 of them were new customers against end of last year. Annuity funds under ICBC trusteeship went up RMB 3 billion to RMB 7 billion where the number of personal annuity accounts under ICBC management rose 1.73 million to 6.78 million and RMB 84.5 billion of annuity funds, or a jump of RMB 30.5 billion, were under ICBC trusteeship.
In precious metal service, sales of ICBC gold were improved by offering more choices to customers among a full range of new products. In 2009, ICBC concluded the buying and selling of 992 tons of precious metal, either acting as an agent or self-selling. ICBC was at the head of the pack with 722 tons of precious metals traded through personal accounts and held on to top spot by clearing RMB 183.5 billion of gold on behalf of Shanghai Gold Exchange.
In order to cater for the diversified needs of customers in liquidity management, ICBC offered different types of ultra-short rollover products without or with fixed terms of 7 days, 14 days, 28 days. ICBC has developed new structural or arbitrage products and launched many wealth management products such as cash options in stock investments, preemptive rights in the trust plan of real-estate investment fund. In 2009, wealth management products sold to corporate clients surged 128% over the previous year to a total of RMB 1,795.1 billion.
［Personal Banking］
Data of People's Bank of China shows that at the end of 2009 ICBC was at the top of the league tables of savings deposit and personal loan with 17.6% and 19.3% market shares respectively. The growth of balances in domestic savings was 16.2% to RMB 4,660.432 billion and that in domestic personal loan was 45.5% to RMB 1,206.85 billion. Personal housing loans shored up 46.3% or RMB 276.87 billion. ICBC scored 216 million personal customers and extended credit to 5.8 million of them. ICBC was The Asian Banker's "Best Large-Scale Retail Bank in China".
ICBC spent efforts in the offering of investment and wealth management products to individual customers where a total of RMB 1,527.8 billion of such products was sold in the country in 2009. ICBC pushed aggressively the sale of investment products of low risk and stable income such as bond, bills, entrusted loans, and issued alternatively a wide range of "Link Express" ultra-short investment products of different offering periods and terms. ICBC classified the customers into mid-range or high-end and treated them differently by offering exclusive investment products and focusing portfolio selling on them. The marketing of personal financial products went in tandem with the personal banking services. Cumulative sales in investment products to personal accounts stood at RMB 887.2 billion, or an increase of 129% over the previous year. In 2009, ICBC hit a sales volume of RMB 640.6 billion in acting as an agent to sell all kinds of personal investment products, including RMB 487.8 billion in selling open-end funds, RMB 72.4 billion in selling personal insurance and RMB 80.4 billion in selling treasury bonds.
New products and services in Elite Club Account are the exclusive investment products and chip cards. Users will find the new Elite Club Account chip cards much safer for transactions. Number of Individual users and visibility of Elite Club Account in the market are both increasing. ICBC received the accolade of "Best Retail Banking Brand of the Year" from China Business News. By the end of 2009, ICBC secured 6.69 million of Elite Club Account customers accounting for an increase of 2.14 million against December 31, 2008.
For customers with personal assets of RMB 1 million or above, ICBC brings together specialists to offer advisory and help formulate individual asset management approach. All in all there are 149 wealth management centers dedicated to serve them. In the offering of wealth management products, ICBC has 48 "ICBC Wealth" products and joined forces with the fund companies to launch 13 "One-to-Many" funds for this group of ICBC wealth customers, who break through 500,000 in terms of numbers and altogether they own assets of more than RMB 1,100 billion.
For high net worth customers with personal assets of RMB 8 million or above, ICBC adopts private banking approach, built on asset management and shaped by an understanding of the needs and aspiration of the customers. In 2009, new private banking divisions were set up in Nanjing, Hangzhou. Exclusive products and customized services solutions were launched for private banking customers. ICBC recruits and harnesses the capabilities of staff to deliver the best service and management for the customers. ICBC was named "Outstanding Private Bank Team of the Year" by 21st Century Business Herald. By the year-end 2009, ICBC has over 13,000 private banking customers and RMB 255 billion of assets under management.
［Bank Card Business］
In bank card business, ICBC concentrates on product innovation and service upgrade while expanding market shares and gathering momentum. ICBC has issued 290 million bank cards as of December 31, 2009, an increase of 50.78 million over the end of 2008. The total value of transactions conducted using ICBC bank cards in 2009 grew by 88.1% from previous year to RMB 1,497.9 billion. Revenue from bank card business shot up 30.7% to RMB 9.408 billion.
In an effort to boost the service level, ICBC started the project of "3 cards integration" to merge the functions and restructure the business process of international credit cards, credit cards and secured credit cards. Promotion programs were launched to attract new cardholders to use ICBC bank cards for buying home appliance or railway tickets, business travel or mobile payment. ICBC issued co-branded cards on a wider scale with companies in the field of new technology and solicited member merchants and discount merchants to join ICBC shopping circles. ICBC also joined hands with large home appliance shopping malls to offer installment payment services by credit cards in a move to expand card acquiring market and overdraft scale. New service centers for enhancing service included the telephone banking center in Shijiazhuang and 25 VIP customer service centers. ICBC issued 52.01 million credit cards as of December 31, 2009, of which 12.96 million were newly issued in the year. ICBC cardholders spent RMB 449 billion using their ICBC credit cards in 2009 with a 76 percent increase over 2008. ICBC pulled away from the peers by wider margin in terms of number of cards issued and card sales volume. Overdraft balance for domestic ICBC-branded credit cards stood at RMB 36.876 billion, accounting for an increase of RMB 19.779 billion or 115.7%.
ICBC joined hands with companies to launch a host of co-branded Money Link cards nationwide or in specific regions. ICBC chip debit cards are of PBOC 2.0 standard to deliver the highest level of security and customer services. Various marketing programs were launched to target at different types of customers to encourage cardholders to spend using their ICBC credit cards. ICBC issued 237 million debit cards at the end of 2009, where 37.82 million were newly issued in the year. Cardholder expenditure volume in 2009 broke through RMB 1 trillion to RMB 1,048.9 billion, representing a jump of 93.8%.
［Treasury Business］
In 2009, ICBC moved faster in product innovation and ensured the investment and transaction were in line with the ICBC policy. ICBC managed the liquidity portfolio and monitored the risks in order to achieve balanced asset scale and efficiency. Domestic ICBC branches altogether borrowed and lent RMB 13,499.3 billion in 2009, or increased by 77.2%, where amount lent witnessed a jump of 490% to RMB 12,622.6 billion. ICBC managed the foreign currency in every detail. Lending of foreign currency was closely monitored and kept at a comparatively short term to ensure the safety. ICBC traded a volume of USD 689.2 billion of foreign currencies in 2009.
In 2009, ICBC trading in RMB bonds was significantly increased by notching RMB 2.6 trillion traded through transaction accounts. Up to 64 book-entry T-bonds were traded at the counter through market maker. Trading volume of RMB interest rate swaps in 2009 went up 81.7% to RMB 60.5 billion. In foreign currency, ICBC mainly bought and sold mid-term US treasury bonds to a total of USD 40.1 billion in the year.
In 2009, ICBC saw the interest rate trends and invested primarily in sovereign bond or quasi-sovereign bond. Until the end of 2009, investment balance in ICBC RMB bond accounts was RMB 3,476.234 billion. In foreign currency, ICBC watched the movement in international financial market and built good product portfolio. ICBC controlled the credit risk by choosing the right opportunity to sell the risky bonds backed by foreign currency.
ICBC launched new products on the sales and settlement of foreign exchange. New business processing systems in production included the automated reporting system and consolidated price inquiry system. In 2009, foreign exchange that ICBC settled for customers together with FX bought and sold reached USD 286.2 billion. ICBC launched new types of structural deposit products and traded a volume of USD 82.2 billion of structural derivative products on behalf of customers. ICBC actively promoted the RMB interest rate derivatives to customers and helped the customers to trade.
［Electronic Banking］
The transaction volume of ICBC electronic banking in 2009 grew by 24.8% over the previous year to RMB 181.31 trillion. Ratio of electronic banking transactions to all ICBC transactions moved up 7 percent points to 50.1%. By the year-end 2009, ICBC scored 450,000 new corporate internet banking customers from end of 2008 to a tune of 1.89 million, while number of personal internet banking customers was 75.36 million with 18.64 million were new. Total transaction amount of corporate internet banking rose 22.5% to RMB 135.35 trillion, and that of personal internet banking up 82.3% to RMB 17.81 trillion. Global Finance named ICBC Internet Banking as the "Best Integrated Corporate Bank Site-Global", "Best Consumer Internet Bank in China".
ICBC restructured the Telephone Banking system with new services such as "Dial-to-pay", 400 VIP line, optimized voice menus for fast and easy steps. Voice prompts in the telephone banking of Shenzhen Branch and Shandong Branch were successfully linked and managed. ICBC pushed ahead the intensified and standard operation of Telephone Banking. Mobile Banking (WAP) has a new 3G version that answers for greater accessibility of banking services via mobile phone, either enquiry, transfer or bill payment.
ICBC continues to install more ATMs and self-service devices at different locations. By the end of 2009, ICBC had 8,726 self-service banking or increased 23.2% from end of previous year; 34,089 ATMs or a growth of 19.0%. ICBC ATMs generated a transaction volume of RMB 2,046.9 billion, accounting for an increase of 31.6%.
［Advanced IT］
ICBC embraces technology to stay relevant and ensures the information systems are running in a stable and safe manner. To fully support the ICBC core competitiveness by advanced IT, ICBC has invested heavily to put the fourth generation application system (NOVA+) in production. ICBC held on its first place in the ranking of the "iPower500 of Chinese Enterprise Informatization" and snapped major awards for "Grand Award for the Informatization of Enterprises" and "Best Overall IT Architecture" and "Best IT Bank in China" from Chinese Banker.
ICBC made full advance in the development and optimization of application products with 539 projects completed in 2009. The new financial products enriched the ICBC product repertoire and helped ICBC boost the business performance and risk control. "3 cards integration" was completed as scheduled so that all credit card products were managed under "one system, one regulation". In the offering of general bank accounts, the new system provided unified view on all the accounts in different channels. ICBC was the first in the country to launch 3G Mobile Banking (WAP). More functions and services were created in Internet Banking and Telephone Banking for the customers. ICBC started a major overhaul in remote authorization, operational risk management and centralized business processing while accelerate the research development research capabilities on the applications for financial market, private banking and investment banking. A new internal system has been set up for rating the credibility of personal customers. Significant progress achieved in creating systems for the management of market risk and operational risk. ICBC has built a platform for the centralized management of ICBC reports so that all reporting data were automatically processed. FOVA system was installed in 15 overseas subsidiaries. In 2009 ICBC received 19 patents awarded by the State Intellectual Property Office. Up to now, ICBC has 91 patents.
［Standardized Management］
ICBC has established comprehensive risk management procedures to effectively control various types of risks. Board of Directors, senior management and all ICBC staffs duly perform their own duties. ICBC learned experience from international to address credit risk, market risk, liquidity risk and operational risk. ICBC also scored progress in capital management by streamlining the allocation of capital in an efficient manner. ICBC kept its capital adequacy ratio and core capital adequacy ratio at 12.36% and 9.9% respectively, comfortably above the minimum regulatory requirement.
In 2009, ICBC stepped up its efforts to adopt New Basel Capital Accord and the applications of Internal Rating-Based Approach (IRB), the Internal Model Approach (IMA), Advanced Measurement Approach (AMA) and Internal Capital Adequacy and Assessment Process (ICAAP). Internal credit rating systems were enhanced continuously to estimate the credit worthiness of corporate entities and determine the facility rating for corporate exposure. Results from the internal rating (non-retail banking) were actively applied in the full process of risk management. An internal credit rating system has been in place to evaluate the ability of individual borrower to repay loans and measure the risk in issuing credit cards to potential cardholders. ICBC started the Internal Model Approach in full gear and was the first bank in the country to independently develop system to manage the market risks in the whole bank. ICBC has also made full preparation to adopt Basel II and Internal Capital Adequacy and Assessment Process (ICAAP) in order to improve ICBC risk management in the areas of governance structure, risk assessment, capital assessment and planning, in particular the maintenance of capital adequacy for regulatory checking. System and measures were set up on stress testing. The credit risk and stress testing (phase I) system independently developed by ICBC was put into production. ICBC was also the first bank in the country to apply stress testing of credit risk in risk management.
［Social Responsibility］
While China keeps its economy humming by adhering to the state's policy of "sustain growth momentum, effect structural adjustment, bolster reform, benefit people's livelihood", ICBC has been a main force helping engineer the first turnaround in China's economy by strengthening the connection of the credit policy with state policy of expanding internal consumption and industrial policy. Under controllable risks, key national investment projects, key industries and key enterprises that fall within state industrial policy were given the first priority to receive ICBC loans. ICBC moved in line with the state regional development initiatives. Lending to companies in central and western China were faster than the percentage growth of all ICBC loans. ICBC took important steps to offer financial services to small-and-medium enterprises. A banking department in head office together with nearly 1,000 banking units in ICBC were set up with a special focus on small business. In an attempt to start village bank as one new type of rural financial institutions, ICBC has established village banks which are independent legal entities, in Zhejiang's Pinghu and Chongqing's Bishan.
ICBC is a vociferous advocate of green finance and actively promotes revolving economy. ICBC has been successful in using leveraged lending to promote low carbon economy and green banking, using new model and control means to manage green loans under the principle of "support the best and restrict inferior companies, lend to eco-friendly companies and stop lending to high energy-consumption, high emission companies." Loans were strictly forbidden to companies of over-production or have the potential of over-production. On the other side of the coin ICBC extended credit to green companies in renewable energy sectors of waterpower, solar energy, biomass energy and key industries of intelligent power grid, new energy automobile and new car fuel. By the end of 2009, balance of ICBC loans released on eco-friendly projects totaled RMB 114.929 billion and RMB 102.925 billion for projects in exploration and utilization of new energy.
Socially ICBC is committed to "Origin from the community, give back to the community, serve the community" and sponsors philanthropic causes. In 2009, besides the donations from the ICBC staffs, ICBC (Head Office and all the domestic branches) has put in RMB 24.66 million for numerous public welfare initiatives in poverty alleviation, cultural and education, sports and charity. ICBC received the accolade of "Love Example in New China 60 Years" by China Foundation for Poverty Alleviation.
ICBC was recognized internationally and in the country for the outstanding initiatives in corporate social responsibility. Among the list of 10+ coveted CSR awards presented to ICBC included "People's Award for Social Responsibility", "Best Corporate Social Responsibility", "Most Harmoniously Competitive Listed Company of China", "2009 Best Corporate Citizen in China", "2009 Corporate Social Responsibility Ranking of China Enterprises: Outstanding Enterprise".
［International Accolades］
ICBC's excellence in business won the recognition from home and abroad. In 2009, ICBC received a total of 146 awards including "Bank of the Year (Asia)", "Bank of the Year (China)", "Most Respectable Enterprises in China" presented by flagship publications and intermediary organizations in the world as Global Finance, The Asset, Finance Asia, Asian Banker, Asiamoney and League of American Communications Professionals. International companies engaged in brand study gave high remarks to ICBC. In the Millward Brown Optimor's 2009 ranking of Top 100 Most Valuable Brands, ICBC ranked top of all financial institutions. Among the winners announced by World Brand Lab on the 2009 (Sixth) China's 500 Most Valuable Brands, ICBC was the most valuable brand with a brand value of RMB 125.086 billion.