Industrial and Commercial Bank of China Announces 2013 Results
OREANDA-NEWS. April 02, 2014. Industrial and Commercial Bank of China (Stock code: SH: 601398; HK: 1398) today officially announced its 2013 results. In accordance with the International Financial Reporting Standards, ICBC posted net profit of RMB 263 billion for the year of 2013, up 10.2% over the previous year. Earnings per share reached RMB 0.75, up RMB 0.07 year-on-year. Net asset per share reached RMB 3.63, up RMB 0.41 over the same period last year.
According to a resolution by the Board of Directors, ICBC’s 2013 annual cash dividend is expected to reach RMB 91.958 billion (pre-tax dividend at RMB 2.617 per 10 shares), representing an increase of RMB 8.393 billion compared to the previous year. The expected cash dividend ratio is 35%. Since its listing, ICBC has consistently adhered to its stable and long-term cash dividend distribution mechanism, distributing a cumulative cash dividend return of RMB 472.3 billion to its shareholders between 2006 and 2013, with a cash dividend rate higher than the one-year fixed deposit rate of the same period for six consecutive years. The dividend yield ratio for 2013 reached 7.3% (calculation based on its stock price at the end of 2013), a leading cash dividend ratio among listed companies globally. While continuously creating value for its shareholders, ICBC has been unceasingly enhancing its market position and influence. In 2013, ICBC was recognized as one of the global systematically important banks. As rankings published by Forbes and The Banker show, ICBC has become the world’s largest enterprise and the bank with the largest tier-one capital. In Fortune magazine’s ranking of total operating revenue, ICBC topped the list among commercial banks.
In 2013, responding to complex economic conditions both domestically and globally, and amid intense market competition involving active financial innovations and a diverse group of market players, ICBC accelerated the transformation of its operations and business innovation, strengthened its internal management, and enhanced the competitiveness of its service. With these measures, ICBC not only achieved stable performance growth for the period, but also forged new advantages for its future sustainable development. ICBC’s operation and management during 2013 exhibited the following characteristics:
First, the Bank enhanced its quality and efficiency in serving the real economy, and continuously improved its credit operation.
In 2013, ICBC focused on strengthening financial support for the demand in the real economy, particularly through further adjustments of new loans and optimization of credit structure, so as to improve the quality of the loan operation along with the enhancement of its services for the real economy. New RMB loans made by ICBC’s domestic branches for the year amounted to RMB 924.4 billion, representing an increase of 11.7%. Total loans reached RMB 8.7 trillion, up by RMB 974 billion over the previous year, surpassing the volume of new loans for the year.
As for loan allocation and structure, ICBC directed its medium-term and long-term loans mainly to continuous construction projects, while highlighting its support for advanced manufacturing, modern services, cultural industries and strategic emerging industries, with new loans for these purposes accounting for 85% of ICBC’s entire corporate loan increment. Loans invested in ecological protection, energy conservation, recycling and other green areas reached RMB 582.5 billion. At the same time, strict controls over lending were applied to industries with high level of energy consumption and pollution, as well as industries with excessive capacity. To the latter, financial leverage is applied for further adjustments. Small and micro enterprises (SMEs) financial services continue to improve, with loans reached RMB 1.87 trillion. ICBC also proactively explored an innovative mode of supply chain finance and expanded its customer base to more than 10,000 SME customers upstream and downstream of 1,300 supply-chain core enterprises, which spurred a 1:8 pull effect. Apart from promoting the integration of logistics, information and capital flow and enhancing risk control, this business mode effectively eliminates the obstruction in the cash flow and helps to unravel the debt chain for a number of companies. In order to stimulate consumption and meet the financial needs relating to people’s livelihoods, ICBC’s personal loans and bank card overdrafts increased by RMB 373.4 billion and RMB 62.2 billion respectively. Furthermore, the Bank also integrated the use of various financing tools such as financial leasing, short-term financing bonds, medium-term notes and syndicated loans. All these measures satisfied the diverse needs of the real economy and helped the Bank expand into new markets.
Second, the Bank promoted reform and innovation at full speed, which continuously enhanced its capacity of sustainable development.
In 2013, ICBC carried out in-depth studies on the challenges and opportunities along with multi-level capital market development, acceleration of interest rate liberalization, and Internet Finance. The Bank promoted innovation in business through new thinking and models, for example the Bank launched an integrated electronic business platform which provides online shopping, online financing services as well as consumer loans. Other typical examples include small amount direct-payment consumer loans and SME loans based on real transactions, etc. Such products with online financial features improved the convenience and usability of its service, and better adapted to the changes in customers’ financial needs. Owing to the innovative synergy stimulated by business integration and cross-selling advantages yielded from the wide customer base, retail services and emerging businesses such as financial asset management have achieved rapid growth.
By the end of 2013, ICBC had issued a total number of 580 million bank cards, with a total consumption of RMB 5.77 trillion, which was among the world’s highest and exceeded the sum of online retail sales in China. Credit card issuance and consumption reached 88 million and RMB 1.6 trillion, up 14.2% and 23.9% respectively, putting ICBC in the lead in Asia in terms of both credit card issuance and consumption volume. Income from the investment banking business such as mergers and acquisitions increased by 43% due to surging demand caused by structural adjustment. The Bank participated in nearly 800 merger and acquisition projects with total transaction volume exceeding RMB 200 billion, double of that in 2012. ICBC’s total number of e-banking customers reached 390 million, of which the total number of mobile banking customers topped 100 million. The trade volume of E-banking exceeded RMB 380 trillion, taking up 80% of the total transaction volume of the Bank. Total assets managed by the private banking division increased by 14.4% to RMB 541.3 billion. The total value and amount of the precious metal transaction increased by 20.2% and 35.5% to RMB 1.31 trillion and 136.6 thousand ton, respectively. The total net value of assets under the Bank’s custody reached RMB 4.6 trillion, an increase of 16.8% over the end of 2012. Pension funds under the Bank’s trusteeship amounted to RMB 54.6 billion, with 12.38 million individual pension accounts under the Bank’s management, maintaining a leading position over its peers.
Meanwhile, ICBC paid more attention to balanced development of its traditional businesses and emerging businesses. With innovative ways to unleash the growth potential of deposits, payments and settlements, the Bank achieved favorable growth amidst fierce competition. As at the end of 2013, RMB deposit excluding inter-bank deposits increased by RMB 977.9 billion, or 7.2%, to RMB 14.62 trillion.
Third, overseas institutions developed steadily and quickly, with their contribution to the Bank’s profit and strategic synergy continuing to enhance.
In 2013, ICBC furthered its globalization strategy by continuing to penetrate overseas markets and strengthening its customer service capability globally, which enabled the Bank’s international business to maintain strong momentum. As of the end of 2013, total assets of the Bank’s overseas institutions were USD 209.16 billion, an increase of 28.5% from the end of the previous year. Profit before tax was USD 2.23 billion, an increase of 33.5% compared to the previous year, with the growth rate considerably exceeding that of the Bank’s domestic business, demonstrating its strong overseas growth momentum. Moreover, the NPL ratio of overseas institutions was maintained at a low level of 0.49%. Asset quality ranked among the top banks globally, fully illustrating the importance of globalization in stabilizing profit and spreading risks. ICBC’s network of international institutions was further expanded with more than 300 institutions covering 40 countries and regions. The Bank also saw indirect expansion into 18 African countries through the acquisition of shares of Standard Bank in South Africa, building a global service network that covers Asia, Africa, Latin America, Europe, North America and Oceania. In addition, the number of correspondent banks surged to 1,730, covering 145 countries and regions.
As for cross-border RMB business, by the end of 2013 the total volume has approached RMB 2.2 trillion, an increase of nearly 40% year-on-year. ICBC Singapore Branch, the first RMB Clearing Bank outside China appointed by the People’s Bank of China, concluded a RMB clearing amount exceeding RMB 2.5 trillion during the year. Moreover, the Bank’s integrated operation system, which includes funds, financial leases, licensed investment banking, insurance and securities clearing, has continuously improved. The Bank’s diversified subsidiaries achieved 164% growth in net profit in 2013, thereby enhancing their profit contribution and strategic synergy effect to the Group.
Fourth, the Bank maintained stable asset quality with adequate allowance and controllable risk.
In 2013, in view of the new challenges arising from the asset quality of the banking industry due to the deepening of China’s economic restructuring, ICBC adhered to its line of defense in risk management. By focusing on preventing risks in industries with excessive capacity as well as in small and micro enterprises which are more vulnerable to economic fluctuations, the Bank kept its asset quality stable with adequate allowance and controllable risk. As at the end of 2013, the Bank’s NPL ratio was less than 1%, a slight increase of 0.09 percentage point to 0.94%. Allowance to NPL of the Bank was 257.19%, in the lead among international peers.
In terms of loans to local government financing vehicles (LGFV), to the real estate sector and to industries with excessive capacity, which aroused considerable market concern, the Bank continued to strengthen controls over the total amount of financing and maintained satisfactory credit quality. As at the end of 2013, the balance of ICBC’s loans to LGFVs were reduced by RMB 94.3 billion over the end of last year. There are no new non-performing loans in this sector during the year, and the NPL ratio of LGFV loans fell by 0.24 percentage point from the end of last year to 0.15%. Meanwhile, the Bank’s cash flow coverage ratio in the LGFV sector stood at 98.5% for fully-covered and generally-covered loans combined. By the end of 2013, the balance of ICBC’s real estate development loans fell by RMB 8.6 billion and the NPL ratio was down by 0.03 percentage point to 0.72% compared to the end of last year, which was mainly due to the method of loan redemption for re-financing to support the reasonable financing needs of the real estate sector. Loan balance to industries with highly excessive capacity were reduced by RMB 19.9 billion over the end of last year, and the NPL ratio was down by 0.97 percentage point to 0.79% compared to the previous year.
Fifth, customer service was significantly improved with further consolidation of foundation for development.
In 2013, ICBC continued to improve its customer service and achieved further optimization and enhancement of its customer base. The number of ICBC’s domestic retail customers increased by 9.9% to 430 million and the number of corporate customers increased by 8.1% to 4.735 million.
As for distribution channel management, the Bank launched a project aiming to enhance the competitiveness of its outlets both online and offline, not only by accelerating the establishment of self-service channels in new urban areas and in key counties, but also by launching new mobile banking services such as WeChat banking. During the Year, as nearly 15,000 new ATMs were installed, the sum of ATMs of the Bank topped 80,000, and the number of self-service banking outlets reached 21,800, providing 24-hour consecutive services for customers. Nearly 80% of the Bank’s business was done through electronic channels, which not only reduced energy consumption, but also enhanced the efficiency of financial services for all the society. As for process reform, the Bank focused on optimizing the business acceptance and operation process over the counter, and completed the “one form, one password and one authorization” trinity function enhancement for main businesses, which enabled customers to fill out the information form and input the password only once, even when processing several different transactions. This greatly improved the on-site customer experience and enhanced operating efficiency by over 20%. The Bank highlighted improvement of over-the-counter services by opening additional counters to manage peak-time customer flow, setting up simple transaction express lines, and arranging support from back-office staff. As a result, service at outlets was further upgraded and processing time for each single transaction was reduced by 10%, to an average waiting time of around 10 minutes at most outlets. In terms of IT support, ICBC planned and started the establishment of “IT-based banking”, utilizing information technologies such as big data, cloud computing and mobile internet to re-structure business flow and management systems, which exploited deeply imbedded customer value and served as a crucial support for the Bank in various competitions.