26 March 2015 -- Industrial and Commercial Bank of China Limited (“ICBC” or “the Bank”; stock codes: SH: 601398, HK: 1398) today announced its annual results for the financial year of 2014. In accordance with the International Financial Reporting Standards, ICBC posted a net profit of RMB276.3 billion for the year of 2014, representing a growth of 5.1% as compared to the corresponding period last year. Basic earnings per share reached RMB0.78, up RMB0.03 year-on-year. Net asset value per share at year-end was RMB4.33, grew by RMB0.7 or 19.3% over the prior year.
According to a resolution by the Board of Directors, ICBC’s 2014 annual cash dividend is expected to reach RMB91.026 billion, with pre-tax dividend amounting to RMB2.554 per 10 shares. Since its listing, ICBC has consistently adhered to its stable and long-term cash dividend distribution mechanism, distributing a cumulative cash dividend return of RMB563.348 billion to its shareholders between 2006 and 2014, with a cash dividend rate higher than the one-year fixed deposit rate of the same period for seven consecutive years from 2008 to 2014. This signifies a leading cash dividend payout among listed companies globally.
While continuously creating values for its shareholders, ICBC has been enhancing its capital strengths as well as its market position and influence. In 2014, ICBC successfully issued up to RMB20 billion worth of tier 2 capital instruments and RMB35 billion worth of preference shares overseas. At the same time, the Bank relentlessly accelerated its operational transformation and capital-saving development. In April 2014, ICBC obtained the approval from the China Banking Regulatory Commission to take on advanced measures for capital management. As at the end of 2014, as calculated by the new capital rules, ICBC’s capital adequacy ratio stood at 14.53%, up 1.41 percentage points from the end of last year. Its core tier 1 capital adequacy ratio and tier 1 capital adequacy ratio reached record highs of 11.92% and 12.19%, respectively, representing an increase of 1.35 percentage points and 1.62 percentage points, respectively, compared to the end of the previous year. During the year, ICBC was awarded the “Bank of the Year – global and regional winners” title by British magazine The Banker, becoming the first commercial bank in Asia crowned in this global category. Moreover, In The Banker’s 2014 Top 1000 World Banks ranked by tier 1 capital, ICBC stayed on the top rank among the banks in the world.
In 2014, in response to an increasingly complex global economy, coupled with rising economic challenges and deepening financial reform in the domestic scene, ICBC firmly grasped the needs and development trends of the real economy to keep improving its financial service offerings, promoting reforms and innovation and the transformation of its operations, and strengthening its risk management and control, thereby achieving healthy and steady development in the new normal. All in all, these are broadly reflected in five aspects as listed below:
First, the Bank effectively integrated the management of its loan increments and existing loans and of credit and non-credit financing with the provision of diversified financial services to promote the transformation,upgrading and development of the real economy.
With respect to credit financing, new loans in RMB and foreign currencies of ICBC’s domestic branches increased by RMB927.3 billion compared with the beginning of the year, growing by RMB34.9 billion or 10.1% year-on-year. Loans disbursed amounted to RMB8.98 trillion, representing 9.6 times the value of new loans and an increase of RMB277 billion over the same period of the previous year. Re-lending of retrieved existing loans plus new loans amounted to RMB3 trillion for the year, giving the real economy a further support.
In 2014, ICBC actively improved its credit operation, not only to further optimize related credit structure and marginal benefit, but also to serve the transformation and upgrading of the real economy. Loan increments and reshuffle of existing loans were mainly for the key fields, weak links as well as new growth zones in the latest economic development scene. New loans to advanced manufacturing, modern services, cultural industries and strategic emerging industries increased by RMB271.8 billion, accounting for 67% of ICBC’s domestic corporate loan increments. During the year, ICBC extended more than RMB4 trillion in loans to small and micro enterprises and personal customers, accounting for nearly 50% of its domestic RMB loans.
In the area of non-credit financing, ICBC actively adapted to the trends of increasing demand for corporate direct financing, capacity consolidation, and mergers and acquisitions in the course of economic transformation and upgrading. By utilizing approaches including "commercial banking+ investment banking" and " on-balance sheet + off-balance sheet", the Bank vigorously built its portfolio of bond underwriting, syndicated loans, and M&A advisory businesses. The Bank has underwritten debt instruments amounting to RMB470 billion for non-financial enterprises, taking up the number one position in the industry; managed syndicated loan agreements with aggregate value of up to USD46.7 billion as the lead bank, ranking the first among lead banks of syndicated loans in the Asia-Pacific region; participated in 319 M&A advisory projects with total transaction volume exceeding RMB140 billion, up by nearly 60%, ranking the first in Asia Pacific and beating leading international professional investment banks.
Second, the Bank maintained stable asset quality with overall risk controllable.
As at the end of 2014, the Bank’s non-performing loan (NPL) ratio stood at 1.13%, a slight increase of 0.19 percentage points over the end of 2013. Asset quality remained at a favourable level as compared with its peers both domestically and globally. With adequate allowance, allowance to NPL of the Bank was 206.9%, a top level among international banks.
To cope with increasing challenges for risk management under the new normal in the economy, ICBC proactively promoted innovative means of management with a move to toughen its precautionary measures for risk control and further the stability of its asset quality. With the establishment of a credit monitoring centre at its headquarters, the Bank boosted its capabilities in dynamic monitoring of and real-time alerts to possible risks by combining its abundant experience in risk management with big data technologies. In 2014, ICBC conducted a risk review of its credit assets in excess of RMB5 trillion, rectifying the financing of assets with potential risks in a timely fashion and stemming the origination of bad assets at the outset. At the same time, a professional team was set up to enhance the efficiency and effectiveness of the disposal of non-performing loans by leveraging the Bank’s investment banking business with innovative measures.
In terms of loans to local government financing vehicles (LGFV), and for the real estate sector and industries with over-capacity that arouse considerable market concern, the Bank has continued to maintain controls over related risks. As at the end of 2014, ICBC’s loans to LGFVs were reduced by more than RMB79 billion over the end of last year. The NPL ratio of LGFV loans fell by 0.08 percentage point from the beginning of this year to 0.07%, with its cash flow coverage ratio reaching 98.7% for fully-covered and generally-covered loans combined. The balance of NPLs to the real estate development sector fell by RMB557 million with the NPL ratio lowering by 0.08 percentage point to 0.64% compared to the beginning of the year. The balance of loans to five sectors suffering from serious over-capacity, including steel, electrolytic aluminum, cement, sheet glass and naval architecture, reduced by RMB8.9 billion.
Third, the Bank accelerated the establishment of a sustainable profit structure with diversified profit streams and various profitable businesses.
ICBC continued to optimize the quality and structure of its profit growth in 2014. Despite lowered fee standards for some of its intermediary businesses, the Bank’s net fee and commission income rose by 9% compared with the same period of the previous year through innovation-based development. In response to the accelerated development of a market-based interest rate, the Bank further improved its asset-liability structure and capital efficiency, resulting in an increase of 9 basis points in net interest margin. Total financial assets of personal customers topped RMB10 trillion, and retail business accounted for 40% of overall operations. Net profit of the Bank’s overseas institutions increased by 35.6% to RMB15.1 billion, and net profit of the Bank’s diversified subsidiaries increased by 29% to RMB3.5 billion. Such a rate of growth is significantly higher than that of the Bank’s overall profit, indicating the favourable combined effects of strategic synergy, risk diversification and diversified profit streams.
Emerging business advanced significantly ahead, providing a new momentum for profit growth. ICBC has issued a total of more than 600 million bank cards while the annual bank card-based consumption volume amounted to RMB7.5 trillion, leading the industry with impressive numbers. Of which, the number of credit cards issued surpassed the 100 million mark, ranking ICBC among the three largest credit card issuers in the world. During the year, the number of ICBC private banking customers rose to 40,000. Total assets under management posted a growth of 36% year-on-year. The balance of wealth management products exceeded RMB1.9 trillion, which translated into more than RMB68 billion in returns for customers. This cemented further ICBC’s status as the biggest asset management bank in the domestic market. At the same time, net custodian assets hit RMB5.8 trillion and pension funds under its trusteeship stood at approximately RMB70 billion, maintaining the Bank’s number one position over its peers.
Fourth, Internet financing business achieved scalable effect and explosive growth upon successful rollouts of “e-ICBC” Internet financial products and services.
Following months of hard work, ICBC’s e-ICBC strategy and deployment have achieved scalable effect and made breakthrough in term of growth. The
“ICBC E-shopping” e-commerce platform, which positions itself as a high-quality merchandise marketplace, has had cumulative registered users of 16 million in 14 months since its inception with total transaction amount exceeding RMB100 billion, ascending to the top 10 e-commerce operator list in China. “ICBC e-payment”, an instant payment product which features small amount and high efficiency, saw customer accounts surpassing 50 million upon a year’s expansion and online transaction amount exceeding RMB65 billion as well as a trading capacity hitting 11.2 million transactions a second. The cumulative loan volume of ICBC’s “Easy Loan”, a new credit loan product based on O2O direct consumption, amounted to more than RMB230 billion with the balance exceeding RMB170 billion, basically equivalent to the total transaction volume of the P2P lending business nationwide. ICBC’s "Online revolving loan", an internet financing product tailored to small and micro enterprises, has dealt out RMB1.6 trillion of loans to 69,000 clients with the balance reaching more than RMB250 billion, making "Online revolving loan" the biggest internet finance product in terms of loan volume. The ”ICBC e-investment” platform designed for precious metal and crude oil trading has more than 150,000 customers, and is the only trading platform that targets individual investors. ICBC has also developed “College students e-service” for young customers and ”business friends club” for the business community. Its diversified service portfolio grew rapidly, catering for the needs of people from all walks of life.
Fifth, net contribution from globalized and integrated operation grew significantly, and new opportunities are coming from “One Belt, One Road” strategy.
In 2014, net profit of the Bank’s overseas institutions rose by 35.6% year-on-year to RMB15.1 billion, pulling the profit growth of the Group by 1.4 percentage points. When taking the Bank’s overseas institutions as an independent banking entity, its sizable scale has enabled it to be ranked among top 100 banks in the world. As at the end of 2014, the Bank’s overseas network reached out to 41 countries and regions with 338 branches. ICBC has the largest global network among Chinese financial institutions. It indirectly covers 20 African countries as a shareholder of Standard Bank in South Africa, extending its global service network to six continents - Asia, Africa, Latin America, Europe, America and Australia. With a view to optimizing its overseas operation network, the Bank has also established relationships with over 1,800 overseas banking institutions covering 95% countries and regions which invest in or trade with China. Meanwhile, NPL ratio of the overseas and others stood at a mere 0.41%, vindicating the advantage the Bank is enjoying on the back of its globalization strategy.
Cross-border RMB business started in full swing with speedy establishment of the cross-border RMB clearing network. To date, the Bank has had five RMB clearing banks designated by the People’s Bank of China in Singapore, Luxembourg, Doha, Bangkok and Toronto. It is the first financial institution that owns overseas RMB clearing banks in different time zones of Asia, Europe and the Americas. Its cross-border RMB clearing network covers 76 countries and regions, forging a 24/7 RMB clearing business structure. Trading volume of RMB clearing business amounted to RMB37 trillion for the year, 13 times of that achieved in 2013. Cross-border RMB business totalled RMB3.66 trillion.
To date, ICBC has built a global operation and service network in coordination with the “One Belt, One Road” national strategy in terms of country and region coverage. With more than 70 branches and subsidiaries in 17 countries along the New Silk Road Economic Corridor, the financial services offered by the Bank have virtually covered all of the designated zones as devised by the nation. ICBC possesses ample resources and has well advance locked in major projects with good business potential. As at the end of 2014, the Bank pledged financial support of up to USD10.9 billion to 73 overseas projects along the "One Belt, One Road".
The Bank’s fast growing diversified subsidiaries have continued to contribute to the strategic synergy effect to the Group. By bringing three major sectors of “aviation, shipping and large equipment” under its roof, ICBC Leasing led the industry and operated and managed assets totaling RMB235.6 billion as at the end of 2014. ICBC Credit Suisse Asset Management also came into the top three on the ranking list with mutual funds under management exceeded RMB250 billion. ICBC-AXA realized revenue premiums of RMB15.4 billion, up to 50% year-on-year, staying firm as one of the top bank-backed insurance companies in the industry.