OREANDA-NEWS. May 20, 2011. Beginning from 2010, ICBC started the profit center reform on some business product lines in an effort to re-invigorate them. In other words, calculate the value contribution of the business product lines independently via individual auditing and result-oriented performance evaluation in order to make the shift of Head Office's business departments to profit center-based instead of management center-based. Take ICBC Bill Department as an example, reported the press-centre of ICBC.

The Department generated significant higher profit since pilot started in early 2010 to turn the Department into a profit center using applicable business development model. Within 15 months from the start of the reform to end of first quarter this year, Bill Department has registered a total profit of RMB 1.327 billion. In 2010, the Department saw its profit to RMB 1.037 billion. Profit contribution per person in average broke through RMB 4 million. Profit in the first quarter of this year surged over 30% against the same period last year to hit RMB 290 million.

Bill Department pushed the reform to turn itself into a profit center in accordance with the requirements and pursued a business system from different areas - market expansion, resource allocation, capital turnover, product innovation and risk control. The Department also built forward momentum with the ICBC branches and set up a unified marketing scheme with clear responsibility and orderly management in a bid to support the profitability growth through a strong customer base. The Department has reached a historic high in customer scale under gradual expansion.

Meanwhile, ICBC Bill Department also established a value-creation oriented performance valuation scheme with an aim to increase the scale allocation efficiency and overall earnings of the business. The Department covered the economic capital monitoring and appraisal to all businesses and applied further the use of economic capital in the performance evaluation scheme. Assets of different types of bills were allocated flexibly with particular emphasis to move forward the low-risk, high-return types of bills. Customer structure, inventory structure and operating structure of bill business were streamlined to achieve optimal asset structure and enhance capital return. Besides, Bill Department geared up its effort to build a capital-saving business development model. Through portfolio management means such as the restructuring of assets and liabilities, and internal transfer pricing mechanism, the Bill Department improved its price negotiation ability in the market and revenue from bills. To "drive profit through buying/selling" instead of "earn interest by bills on hand" by means of larger volume operation, the Department was shifting from "scale efficiency" to "volume efficiency".

Moreover, ICBC Bill Department took innovative approach to business development in order to improve the standard of services to customers and find more profitability points, seeking efficiency from product innovation. Last year, the Department started the trial online finance service and developed new products such as bill wealth management, "Bill Winner" based on the customer needs. New breakthrough was achieved in many emerging businesses like electronic bill, low-risk bill acceptance service. Bill approval, bill safekeeping, bill collection were some of the intermediary businesses that ICBC Bill Department promoted by dint of its centralized operation. Last year, the Department realized diversified profit sources by posting a growth of nearly 15-fold against previous year in revenue from intermediary business to RMB 7.75 million.

Besides, ICBC Bill Department took approaches to strengthen the base of risk management with an emphasis to improve the effectiveness through risk control. Comprehensive risk management scheme and internal control scheme provided assurance to the compliance monitoring and management of business, especially in the whole process of new business. The way of "involve first, keep track of the progress, evaluate later" ensures targeted internal audit. Besides, operational risks were avoided via the "hard control" on transaction permission and credit limit in the computer system. System information was used in full-process risk monitoring where risk warnings and control tips were issued timely through computer system to effectively eliminate the risks of bill operation. ICBC Bill Department was the first banking institution in China accredited with ISO9001:2008 (revision) and creatively combined the ISO standard with bill business. This has provided a strong support to the healthy growth of bill business through the improved process flows and standardized operation. As of today, over the course of nearly 11 years ICBC Bill Department keeps zero percentage in four important risk indexes – rate of accepting fraudulent bills, bad asset rate, fund loss rate and economic crime rate.