Industrial Bank: It Is Hopeful for the Sustained, Steady and Expectable Dividends to Increase Stably in the Future

Date: December 25, 2012          Source: Xinhuanet

Beijing, Dec. 25, Xinhuanet (Reporters: Su Xueyan and Kang Miao) Gao Jianping, Board Chairman of Industrial Bank (IB), indicated on December 25 that, in the coming three years, the profits of the bank distributed in cash will not be less than 20% of the annual distributable profits and on that basis, it will also steadily increase the proportion of dividends and keep it at a reasonable level according to the profits earned and capital sufficiency.

According to statistics, over the more than five years after its IPO, the total cash dividends paid by IB hit RMB 13.1 billion, accounting for 21% of the total distributable profits available to investors in the five years. The mean proportion of cash dividends to the annual weighted average net assets is 4.40%, 140 base points higher than the legal interest rate for the current one-year fixed deposit. The total cash dividends in the latest three years account for as high as 48.41% of the annual mean net profits belonging to the shareholders of the parent company in the same period.

Chairman Gao said: “Returns to shareholders of a listed company come from its business performance. The relations between short and long-term profits and between accumulation of inner source based profits and availability of outer source based capital should be planned as a whole in developing the profit distribution plan. While improving the cash dividends steadily, the sustainable development of the company should also be taken into consideration, especially the sustainability of business model, so as to fulfill the long-term responsibilities and give permanent returns to shareholders.”

In answering the question raised a reporter, “what is the sustainable business model of IB”, Chairman Gao said that the characteristics of IB in exploring sustainable business model in recent years lies in “one point” and “one line”, namely innovation in green finance and innovation in bank-bank cooperation.

It is reported that IB is the first Chinese bank releasing energy conservation and emission reduction loan, energy-efficient financing, carbon finance and environmental finance, and also the only Chinese bank promising to follow the “Equator Principles”. By the end of this October, the financing balance of green finance of IB has exceeded RMB 110 billion and all the emission reduced in the projects supported by such financing loans is equivalent to shutting off 151 thermal power plants of 100 MW a year.

Mentioning the innovation in bank-bank cooperation, Tang Bin, board secretary of IB, introduced that the “bank-bank platform” released by IB took small- and medium-sized banking financial institutions as important customer groups to provide services, and based on the platform, the bank carried out cooperation with such institutions in the business sectors such as payment and settlement, wealth management, capital utilization, and technology output via network connection and mutual agency, providing more outlet services and overall financial services for all participating parties.

It is said that now the customers of the financial institutions networked by IB's “bank-bank platform” can handle basic banking services at more than 16,000 outlets of over 200 financial institutions around China. This helps the small- and medium-sized banks to extend their regional services to all over the country.

“With the driving of the one “point” and one “line”, IB has also made active exploration and innovation in such emerging business fields as supply chain finance, cash management, investment banking, wealth management, and assets management, thus establishing a business model of its own characteristics gradually,” said Chairman Gao.

Now, IB has established a banking group engaging in multiple business fields covering banking, trust, and lease. Over the more than five years after its IPO, the total assets of IB increased to nearly RMB 3 trillion at the end of this third quarter from over RMB 600 billion at the beginning of 2007, and the equity of shareholders grew to RMB 137.9 billion from RMB 16.2 billion. For more than five years, the bank registered total pre-tax profits up to RMB 134.9 billion and after-tax profits RMB 103.6 billion, and the non-performing loan ratio dropped to 0.45% at the end of the third quarter of this year from 1.53% at the beginning of 2007.

The “Equator Principles” are a set of voluntary guidelines for the finance industry initiated and established by major financial institutions around the world, aiming to judge, evaluate and manage environmental and social risks in project financing. Banks adopting the principles are called “Equator banks”.