Industrial and Commercial Bank of China Limited (Stock Code: SH: 601398; HK: 1398) recently announced its results for the first half of 2012. In accordance with the International Financial Reporting Standards, net profit jumped 12.5% year-on-year to RMB123.241 billion with earnings per share of RMB 0.35, an increase of RMB 0.04 when compared to the same period a year ago. Net assets per share rose RMB 0.17 over end of 2011 to RMB 2.91. For the period ending June, 2012, ICBC's capital adequacy ratio and core capital adequacy ratio rose 0.39 and 0.31 percentage points from end of 2011 to 13.56% and 10.38% respectively. Total assets stood at RMB 17.07 trillion (approx. USD 2.7 trillion).

Particularly at a time during the first half of 2012 when it was concerned with a complex and changing operating environment, ICBC maintained good momentum with all the coordinated management efforts to secure stable earnings while ensuring risk control through transformation. Five points explained the ICBC's results for first half of 2012:

I. Support real economy by extending loans whenever necessary. At the end of June 2012, ICBC's domestic renminbi loans increased by RMB 451.2 billion over the end of 2011, representing a growth of 6.4% and RMB 40.4 billion on the same period a year ago. ICBC loans alleviated the difficulties of companies in the real economy in getting access to credit. In extending credit, under the principle of "controllable risks" and "sustainable business", ICBC built a creditworthy, diversified loan portfolio to support the development of real economy. In terms of loans to target recipients, during the first six months of 2012 ICBC eased its lending policy to extend more loans to companies in 4 emerging markets - advanced manufacturing, modern services, culture and strategic new industries. Nearly RMB 350 billion in loans have been disbursed to the above four sectors, accounting for 48% of all ICBC corporate loans while giving impetus to economic transformation and upgrading. On another front, ICBC shifted its loan mix to three strategic business segments - trade finance, loans to micro and small enterprises (MSEs) and personal consumer lending. As of end of June, 2012, ICBC trade facility loans to companies in the real economy surged RMB 124 billion over the end of 2011, or 17.0%. ICBC provided loans of a maximum of RMB 3.99 trillion to small-and-medium enterprises (SMEs), accounting for 72% of total ICBC loans to corporate clients, especially MSE loans (including small business loans and personal business loans) to the tune of RMB 1.8 trillion. Personal housing loans, personal consumer loans and credit card overdraft increased RMB 63.6 billion from end of 2011 to reach RMB 1.79 trillion.

II. Control risk to maintain a stable asset quality. At ICBC, risk management is the key to corporate governance. Program has been started to prepare for the implementation of New Capital Accord. Due to its excellent risk management, ICBC maintained a strong asset quality and kept all risks under control. At the end of June, 2012, ICBC's bad loan rate dropped 0.05 percentage points over the end of 2011 to 0.89%. Provision coverage ratio jumped 14.48 percentage points from the end of 2011 to 281.40%, which further enhanced the Bank's capability to withstand risks. Risks involved in loans to regional government financing vehicles and property sector were under good control as usual. At the end of June, 2012, ICBC loans to local government financing vehicles slid RMB 2.3 billion over the end of 2011 with a non-performing rate of 0.67%, down 0.06 percentage points. Full cash flow coverage and basic coverage of all the loans together accounted for nearly 98%.Under risk control, non-performing rate of property loans fell to 0.90%, while lending to property sector dropped RMB 20.7 billion from the end of 2011.
 
III. Improve business portfolio through coordinated growth. First, ICBC maintained its leading edge in primary services such as deposit. ICBC remained as the world's largest deposit bank. At the end of June, 2012, the Bank's deposit balance rose RMB 1.16 trillion over the end of previous year to hit RMB 14.5 trillion. Stable source of deposit brought balanced growth to ICBC's asset business and diversified portfolio. For the period ending June, 2012, ICBC's loan-deposit ratio slipped 0.4 percentage points over the end of 2011 to 63.1%. ICBC spread its earnings from emerging sectors. Strong growth has been maintained in investment banking services to top-end customers, services related to financial asset, credit card, M&A/restructuring which requires domain expertise. Financial asset services are a range of 10+ services including asset management, private banking, asset custody, pension fund, fund management, trading products via account, bond underwriting, selling products on behalf of, and entrusted loan. These are services require less capital and sought after by the customers, which are important for ICBC's transformation. At the end of half year of 2012, balance of ICBC financial asset services reached RMB 7.18 trillion with RMB 23 billion generated during the first six months of 2012, up 23% year-on-year,. This showed the steady pace of ICBC to turn from a large asset holding bank to a large asset management bank. ICBC has issued over 73 million credit cards by end-June 2012. Cardholder expenditure volume and overdraft amount surged 35.8% and 16.5% respectively from same period a year earlier to reach an impressive RMB 586.3 billion and RMB 207.7 billion. ICBC increased its competitive edge leveraging its domain expertise to offer investment banking services with value-loaded benefits for companies to grow. Revenue generated from branded investment banking services (M&A/restructuring, equity finance, advisory services for companies to issue bonds, arrangement and underwriting of syndicated loans) rose 114.2% on the same period a year ago to RMB 6.431 billion.

IV. Increase geographical spread, post fast asset and profitability growth in overseas branches. 2012 is the 20th year for ICBC to expand its global reach. After two decades of hard effort under a prudent strategy, ICBC has set up a global network of 252 overseas branches spreading 34 countries/territories. This global service platform, together with a presence in Africa through holding a 20% stake in the Standard Bank of South Africa, covers all the major international financial centers and China's trading regions with well-defined hierarchy, reasonable positioning, diversified channels and efficient operation. With an extending footprint across the globe, ICBC achieved leapfrog growth and stellar performance with increased earnings and excellent financial services. As a result, ICBC has struck a good balance between stable profit and risk diversification. ICBC overseas branches had combined assets of USD 166.65 billion as of end of June, 2012, an increase of 33.6% and 1.1 percentage points higher in the ratio to ICBC's total assets when compared to the percentages at the end of 2011. When compared to the same period last year, pretax profit in ICBC overseas branches rose 17.6% to USD 864 million. To enhance the service offering, in the first half of 2012, ICBC entered insurance market through holding stakes in ICBC-AXA Life Insurance. ICBC Credit Suisse, ICBC Leasing, ICBC International brought benefits to the Group through strong synergies.

V. Move forward by embracing innovation and reform in key segments and critical steps. In service innovation, ICBC continues stepping up its business process restructuring and outlet upgrade in a bid to fulfill its performance pledge of bringing the best operational convenience of banking in the door step of ICBC customers. By monitoring the customer traffic at all outlets in real-time and deployment of resources as and when necessary, the number of outlets with long customer queues has been significantly reduced since ICBC customers spent less time in queuing up at the counter on average. In upgrading service channels, ICBC electronic banking is now the users' first choice in banking affairs. During the first six months of 2012, ICBC transactions going through the electronic banking jumped to 73.1%. In terms of product innovation, ICBC leveraged its multi-currency, multi-language global IT platform across different time zones to bring 772 new financial products to a total of 4,015 during the first six months, 2012, 4.5 times the number of products before ICBC went public in 2006. At ICBC, protecting the rights and interest of consumers is always a top priority. ICBC was the first bank in China to set up Consumer Right Protection Office with the aim of bringing forward a system to regulate many of the banking transactions and practices on a routine basis.