Industrial and Commercial Bank of China Limited (“ICBC” or the “Bank”, Stock Code: SH: 601398; HK: 1398) today announced its 2012 results. Based on the International Financial Reporting Standards, ICBC’s net profit after tax in 2012 was RMB 238.7 billion, an increase of 14.5% when compared to last year. Earnings per share and net assets per share reached RMB 0.68 and RMB 3.22, up RMB 0.08 and RMB 0.48 respectively over 2011. The Board of Directors proposed a final dividend of RMB 2.39 (tax inclusive) per 10 shares.
ICBC continued to enhance its overall competency while steadily improving its operating results. The Bank's asset value, capital, deposits and market capitalization all rank first amongst its global peers. As at the end of 2012, ICBC’s total assets reached RMB 17.5 trillion, the highest among banks worldwide. The Bank’s core capital rose to RMB 1.04 trillion, the highest level of any bank in the world. The deposit balance hit RMB 14.88 trillion, making ICBC the world’s largest bank by deposits. ICBC’s market capitalization reached USD 236.4 billion, putting it in the global lead for the fifth consecutive year.
In 2012, in response to the severe and complex economic and financial conditions both domestically and globally, ICBC forged ahead its business transformation that highlights a formulated capital-saving development model as well as a diversified and sustainable manner for profit growth. These measures maintained a good momentum for the Bank, which is reflected in the areas below:
First, the Bank reasonably adjusted its credit scale and orientation, and optimized its loan structure to better support the real economy. In 2012, the outstanding RMB loans of ICBC’s domestic branches rose by RMB 867.2 billion, representing a growth of 12.3% or RMB 55.5 billion over the same period last year. In terms of loan structuring to target recipients, ICBC has adjusted new loan orientation and optimized credit structure, which in turn demonstrated its support of the development of emerging industries, consistent with the country’s economic transformation roadmap. These included advanced manufacturing, service, culture and strategic new industries, where nearly RMB 655.6 billion in loans have been disbursed in 2012, accounting for 103% of all ICBC corporate loan growth. The proportion represented by these loans in the Bank’s total corporate loan balance increased to 48.67%, an increase of 6.7 percentage points compared to the end of 2011. The Bank also made great efforts to better meet the financing needs of small-and-medium enterprises (SMEs), especially micro and small enterprises (MSEs). In 2012, ICBC extended new loans to SMEs, which accounted for 89% of the Bank’s total loan growth. Meanwhile, the balance of SMEs loans at the end of the year amounted to 72% of the Bank’s total loan balance. To meet the prudent demand for consumption-driven loans, ICBC extended RMB 272.2 billion new personal loans such as bank card financing and consumer loans in 2012, and the increase of these personal loans accounted for 27% of the Bank’s total loan growth. The Bank’s outstanding personal loans outperformed its domestic peers to be the first to surpass RMB 2 trillion and provided financing support that boosted consumption and improved people’s livelihoods.
The Bank also demonstrated its commitment to egreen economy, in areas such as energy conservation and environment protection. The outstanding loans to the green economic area reached RMB 593.4 billion. At the same time, these loans were offered only to applicants who strictly adhered to environmental standards, with more than 99.9% of the Bank’s total loans being environmental-friendly in nature or meeting environmental standards. In addition, ICBC has made access to various types of financial innovation to meet diversified corporate financial needs. The initiatives included investment banking, financial leasing, bond issuing and syndicated loans, which helped companies widen their financial channels and lower financing costs, and also cemented a closer and mutually beneficial relationship between the Bank and companies.
Secondly, the Bank continued to enhance its risk management and governance, maintaining stable asset quality. In 2012, ICBC adhered to prudent risk management principle and implemented various new governance rules in a conscientious manner. It further refined the risk management framework, procedures, policies and techniques. On the back of the Bank’s unrelenting efforts to upgrade its risk management capability, the quality of its assets remained constant. As at the end of 2012, the Bank’s non-performing loan (“NPL”) ratio fell 0.09 percentage point from the previous year to 0.85%, maintaining its year-on-year reduction in NPL ratio for the 13th consecutive year. The loan reserve and NPL coverage ratio increased 28.63 percentage points to 295.55%. The Bank has further strengthened its protection against risks and achieved stronger control over major market concerns on risks associated with loans to the financing vehicles of local government and lending to the property development sector. As at the end of 2012, the Bank’s loans to financing vehicles of local government reduced RMB 46.5 billion year on year, its NPL ratio fell 0.34 percentage points to 0.39%, and its cash flow coverage ratio was marked at 98.2% for full-coverage and basic-coverage loans. In terms of loans to the property development sector, the balance of loans at the end of 2012 fell by RMB 26.4 billion over the same period in the previous year. Non-performing ratio of property loans was 0.75%, with risk levels under control. The Bank has already submitted the application for implementation of the advanced capital management method and strives to be among the first batch of Chinese banks to attain the qualifications.
Thirdly, the Bank intensified its business transformation, accelerated the progress of both its capital-saving development mode and the diversified and sustainable approach to earnings growth. ICBC focused its business transformation on financial asset services, which require less capital but contributed more value and enjoyed higher demand. As at the end of 2012, the balance of ICBC’s financial asset services reached RMB 7 trillion, which accelerated the Bank’s pace of transformation from a large asset holding bank to a large asset management bank. Revenue from the high-end investment banking business including mergers and acquisition increased 1.6 times, and the number of M&A deals reached 600 with total transaction amount exceeding RMB 100 billion. Bank card issuance totaled more than 470 million, and the annual bank card-based consumption volume in 2012 amounted to RMB 4.13 trillion. Among which, 77 million were credit cards and RMB 1.3 trillion was settled with ICBC credit cards, putting ICBC in the lead in Asia in terms of both new credit card issuance and consumption volume while also making it one of the world’s top four card-issuing banks. ICBC’s e-banking transaction volume exceeded RMB 300 trillion, a 17.2% increase over the end of 2011, while mobile banking transaction volume soared about 17 times over the end of 2011. The international settlement volume was close to USD 2 trillion, making ICBC one of the world’s leading international settlement banks. Net custodian assets amounted to RMB 3.96 trillion, an increase of 12% over the end of 2011, resulting in the Bank ranking first among its domestic peers for the 15th consecutive year.
Fourth, ICBC made further progress in its pursuit of globalization and integrated development. By the end of 2012, the Bank’s assets of overseas institutions reached USD 162.72 billion, representing an increase of 30.5% from the previous year. The profit after deducting the provision for bad debt was USD 1.673 billion, up 21.8% from the previous year, representing a faster growth than domestic institutions, demonstrating the importance of global operations in stabilizing profits and diversifying risks. By the end of 2012, the Bank’s overseas footprint covers 39 countries and regions. It has established close cooperation with financial institutions in 18 African countries via Standard Bank of South Africa, a major bank in Africa with ICBC being its single largest shareholder. As a result, a relatively comprehensive international financial service network has taken shape. By the end of 2012, the total amount of the Bank’s cross-border RMB businesses reached RMB 1.5 trillion, an increase of 67% from the same period of the previous year. In 2012, the Bank also made its debut in the insurance market through stakes in ICBC-AXA Life Insurance, which has improved and added depth to the Bank’s comprehensive service system. Meanwhile, subsidiaries such as ICBC Credit Suisse Asset Management Co., Ltd., ICBC leasing and ICBC International are playing a more important role in contributing profits and offering strategic synergies to the Group.
Fifth, the Bank stepped up its efforts in innovation and undertaking reforms to provide new impetus for its development. In terms of technological innovation, the construction of ICBC’s fourth generation core information system was successfully completed and achieved full coverage over its offshore institutions. In terms of management innovation, the Bank further promoted the reform of its profit center focusing on the enhancement of product line profitability. The profit of the eight key product lines which underwent reform recorded a year-on-year growth exceeding 20%. ICBC also stepped up the reforms at its provincial branch offices and county-level sub-branches, enhancing its financial services capability in large and medium-sized cities, as well as at key counties and towns. In product innovation, ICBC continued to strengthen its product line building. More than 500 self-developed new products, including a multi-currency credit card and personal account foreign exchange trading, were launched. This propelled the total number of its financial products to 4163, up 28%, enabling ICBC to maintain its distinction as the bank offering the widest selection of financial products in China. In channel innovation, e-banking has become the first-choice channel for business transactions by the Bank’s customers. The volume of business transacted through e-channels accounted for 75% of all business volume, which means that three out of four transactions were finished through e-channels. As for service innovation, ICBC took various measures to improve its service quality and efficiency. In 2012, ICBC effectively resolved more than 500 issues that affected its service efficiency and the average processing time of each transaction was reduced by 20%.