-- Industrial Bank released 2011 annual performance report
On March 20, Industrial Bank (IB) released its annual performance report for 2011. As indicated in the report, in 2011 IB actively grasped the market opportunities, firmly pushed forward business transformation and business innovation, and exerted itself to serve the real economy, with all businesses witnessing sustained growth and improved quality and benefits in a concerted way.
By the end of 2011, the total assets of the company surpassed RMB 2,400 billion, reaching RMB 2,408.798 billion, up by 30.23% over the beginning of the year; the balance of net assets belonging to the shareholders of the parent company surpassed RMB 110 billion, reaching RMB 115.209 billion, up by 25.23% over the beginning of this year; the balance of deposits in both home and foreign currencies reached RMB 1,345.279 billion, increasing RMB 212.512 over the beginning of this year, up by 18.76%; the balance of all loans in both home and foreign currencies reached RMB 983.254 billion, increasing RMB 128.915 billion over the beginning of this year, up by 15.09%, and the non-erforming loan ratio was only 0.38%. Its year-end capital sufficiency reached 11.04% while the core capital sufficiency reached 8.20%. With a good asset-liability ratio, all main indexes of the bank reached the regulatory requirements.
The “cattle-nose-leading” strategy showed its effect and all businesses kept sustained and healthy development at a fast rate
The liability businesses were developed with full efforts. In 2011, the company made prospective analysis and pre-judgment over changes in the macroeconomic situation and development trend. Focusing on the key point of deposit growth, IB exerted itself to improve its service capability and intensify product innovation, made great efforts to extend various deposits via a number of channels, and adhered to the principle of deposits matching loans to ensure that the index of loan-deposit ratio meets the given requirements. Specifically, in the aspect of corporate businesses, IB has made vigorous efforts to develop the supply chain financing service to increase the corporate settlement volume and the reservation of settlement guarantees substantially. By the end of 2011, the company has kept increasing its corporate deposits stably. The balance of corporate deposits reached RMB 1,120.549 billion, increasing RMB 173.608 billion over the beginning of this year, up by 18.33%. The market proportion of the balance of reserved corporate deposits reached 2.39%, and that of the increased corporate deposits 4.06%. In terms of retail business, IB has intensified the special marketing efforts in third-party depository, developed “IB Pass” acquiring business, and released private banking to drive the increase of saving deposits. By the end of 2011, its personal deposits have totaled RMB 224.730 billion, up by 20.94% over the beginning of this year. In addition, the company adopted the strategy of active liability, intensified its efforts in attracting contract deposits to increase the medium- and long-term funds sources, and carried out the assessment over increased loan-deposit ratio to ensure the matching of loans and deposits. By the end of 2011, the loan-deposit ratio of the company has reached 71.46%, meeting the regulatory requirements.
The pricing management became increasingly effective. In confrontation with the changes in the market such as tightened regulation of credit scale and rapid rise in capital price, in order to improve the sensitivity and effectiveness of pricing management, the company has gradually extended the responsibilities of capital pricing management to business lines, thus significantly improving the capital pricing level. In 2011, the net credit spread increased 16 BPs YoY, and the interest spread 48 BPs. The corporate loan and retail loan pricing levels witnessed stable improvement, and the returns on credit assets kept on growing. The interest spread in the fourth quarter went up by 29 BPs over the previous quarter, reaching the highest point since 2009; the net credit spread increased by 42 BPs over the previous quarter, and the net interest incomes registered a new record high. In the aspect of non-credit capital, the bank grasped the market opportunities against the circumstance of limited loan scale, and extended the income sources by way of non-credit businesses. The returns to scale of non-credit assets kept stable, with the daily mean scale increase of redemptory monetary capital for sale amounting to RMB 54.1 billion, and that of inter-bank offer reaching RMB 77.2 billion.
The profit structure witnessed sustained improvement. By the end of 2011, all business incomes realized by IB reached RMB 59.870 billion, up by 37.77% YoY, and the operating expenditure reached RMB 26.338 billion, up by 33.12% YoY. Compared with expenditure, the incomes grew at a faster speed, and the cost/income ratio was kept at a low level among all similar banks, reaching 31.95%, down by 0.96% YoY. The profit growth rate continued being higher than the business growth rate in the same period. The net profits belonging to the parent company registered accumulatively by IB reached RMB 25.505 billion, up by 37.71% YoY; the weighted mean ROE reached 24.67%, up by 0.03% YoY; and the return on total assets reached 1.20%, up by 0.04% YoY. The realized incomes of handling charges and commissions reached RMB 9.418 billion, accounting for 16.09% of the total business revenue of IB, up by 3.94% YoY. Specifically, the incomes of handling charges for agency services based on the improved service capability and development of emerging businesses increased 62.57%, obviously higher than the incomes of handing charges depending on conventional businesses and capital occupation.
Active adjustment of business structure and significant achievement in business transformation
The “gravity center” of services sank and small- and medium-sized customers increased. In terms of positioning customer groups, the company insisted on sinking the “gravity center” of services, stressing on developing small- and medium-sized customers, mini-sized customers and retail customers. By the end of 2011, the company has attracted 299,900 customers, up by 38.66%. Specifically, those at the core layer of cash management reached 4,417, up by 54.28%; the core retail customers hit 1.9230 million, up by 32.32%; and the small-sized enterprise customers defined by IB totaled 231,000, up by 45.42%. In total, IB assisted nearly 3,000 small-sized enterprises to grow into medium-sized enterprises. The customers increased are of ideal quality and quantity, helping the bank to further reinforce the base for the continuous development of businesses.
Improved business structure helped to boost the real economy. The company intensified its efforts to support the real economy, exerted itself to develop loans for medium-sized enterprises engaged in real economy, small-sized enterprises and individual businesses, and compress the loans relating to government financing platform and real estate loans in an active way. By the end of 2011, the loans to medium-sized enterprises engaged in real economy, small-sized enterprises and individual businesses have kept increasing stably, accounting for 30.78% in the corporate loans, up by 6.21% over the beginning of the year. The proportion of the loans relating to government financing platform and real estate loans witnessed significant decrease. Specifically, the concentration of platform loans dropped steadily while the ratio of full coverage by cash flow kept growing stably. The loans for real estate development only accounted for 4.03% of the total loans, down by 1.23% over the beginning of the year, and 6.27% compared with the ratio of 10.3% at the end of 2007.
Strategic and emerging businesses witnessed rocketing development. The key strategic businesses, such as supply chain finance, cash management, credit card, and personal acquiring, and emerging businesses, such as wealth management, private banking, investment banking, assets management, kept growing at a fast rate, the market position and influence of IB kept growing continuously. By the end of 2011, IB kept a leading position in the market regarding the number of enterprises which issued bonds through public offering, the total agency gold businesses of Shanghai Gold Exchange (SGE), and total silver businesses, etc., and ranked front among similar joint-stock banks in terms of the trading amount of personal acquiring and transaction numbers. The supply chain financing business volume surpassed RMB 500 billion, the net value of asset trust RMB 600 billion, and wealth management products sold accumulatively RMB 900 billion, all keeping a fast speed of development.
Integrated businesses were carried out in a steady way. The company completed its capital increase to Industrial Trust and Industrial Leasing, and Union Trust Limited was formally renamed as China Industrial International Trust Limited. The brand influence of IB witnessed further improvement. By the end of 2011, the total assets of Industrial Trust reached RMB 3.357 billion, up by 282.35% over the beginning of this year, and the net profits hit RMB 204 million, up by 168.91% YoY. The total assets of Industrial Leasing reached RMB 27.618 billion, increasing RMB 17.035 billion over the beginning of the year, up by 160.38%, and the net profits realized accumulatively across the year hit RMB 295 million.
With reform deepening, the management and operation support safeguarding capabilities kept growing
Reform was deepened in every aspect in an all-round way. In the aspect of corporate finance, IB has made vigorous efforts to implement the mode of “one body with two wings” and reform, boosting up the internal growth power and professional competitiveness for corporate finance in a practical way. Mainly targeting at the field of real economy, IB has made vigorous efforts to develop emerging businesses including investment banking, supply chain finance, SME business, cash management, and green finance, etc., and exerted itself to push forward the flowing businesses featuring high return, high liquidity, low risk cost, and low capital occupation. In the aspect of retail finance, the bank continued accelerating the development of retail business centering on the principle of “focusing on customers, products, base, reform and input-output”. While making great efforts to improve its organization system and achieve linked development across the bank, IB consolidated its advantages in such fields as financial institutions, finance market, and assets management. It intensified operation management at the middle stage and backstage, continued reinforcing its service, support and guarantee capabilities for business development, and carried out reform in the systems of HR, risk control, and financial management in a collaborative manner.
Internal risk control was intensified continuously. Adhering to the principle of “reasonable development, rational management and compliant operation”, the company has kept intensifying customer admittance management and risk control to avoid aimless development, and balance relation between business development and risk control. By the end of 2011, the balance of non-performing loans of the company amounted to RMB 3.715 billion, and the non-performing loan ratio was 0.38%, down by 0.04% over the beginning of the year. The balance and proportion of its special-mentioned loans both went down. Specifically, the balance of special-mentioned loans amounted to RMB 5.697 billion, decreasing RMB 953 million over the beginning of the year; and the proportion of special-mentioned loans was 0.58%, down by 0.20% over the beginning of the year. While its asset quality was kept at a good level, the provision coverage of the bank reached 385.30%, up by 59.79% over the beginning of the year, with sufficient provision and accrual. IB kept on intensifying its risk control over key industries. By the end of 2011, the asset quality of platform loans has been kept sound, free of non-performing loans; the non-performing ratio of loans for real estate development was 0.28%, and asset quality was better than the average level of loans across the bank.
The operation foundation was reinforced. In 2011, the company established 11 new secondary branches and 59 sub-branches, and the financial institutions under the bank reached 647 at the year end. Private banking operation offices were gradually established at the headquarters and branches. Zhangjiang Main Data Center of Shanghai and Chengdu Operation Center were launched into operation officially, and the new generation of core business system which was put into operation further improved the IT support and guarantee capabilities. With the construction of professional position sequence as the break point, IB kept strengthening the construction of various professional teams, significantly improving its professional service capabilities.
IB realizes that, in the coming years, market-oriented, internationalized and integrated finance will be the mainstream trend for the development of the finance industry, and in particular, market-oriented interest rates and exchange rates, disintermediation of finance, and further financialization of economic development will have significant influence to the conventional businesses of banks. Therefore, all banks must accelerate the transformation of business mode, return to the normal operating state, and make good preparations for the future market changes. IB will unswervingly push forward its business transformation and differentiated development strategy, bring into play its comparative advantages, serve the transformation of economic development mode in a practical way, and adapt to the changes in the outside environment so as to achieve greater and sustainable development. In 2012, while keeping businesses growing in a stable and balanced manner, the company will attach greater importance to customer base, structure improvement, input-output, and growth of benefits, and endeavor to improve the standard, professional and refined management so as to propel its business management up to a higher stage.