-- 25 anniversary of Industrial Bank
25 years ago， Industrial Bank (IB) was a bank, which was hardly known by people, located at a corner in Southeast China, which only had a business outlet with 68 employees and an amount of capital of RMB 300 million.
But 25 years later, IB has set up outlets across China, with a total of more than 40,000 employees. With its total assets exceeding RMB 3.5 trillion, it has ascended into the China Top 10 Banks, Global Top 50 Banks, and Fortune Global 500.
Over the past 25 years, keeping in its mind the dream of “a first-class bank, a long-flourishing IB”, the Bank, based on the national situation and market reality of China, observed the internal development rules for commercial banks, seized opportunities by following the trend, adhered to the differentiated business operation, sought development through innovation, and pushed forward transformation through reform, gradually developing a development path with unique IB characteristics.
Forging a Branded Blue Chip with Fast Growth
No other words than “fast and sound” can better describe the development of IB in the past 2 years. With sustained fast growth, outstanding performance and good returns, IB has built itself into a branded blue chip in the Chinese capital market, an honor that it fully deserves.
By the end of June 2013, the total assets registered by IB hit RMB 3,577.3 billion, 2208 times as great as the number at the initial stage (1988), with a mean compound annual growth rate of 36%; the balance of various deposits RMB 2,082.2 billion, 19,000 times as great as the figure at the end of 1988, with a mean compound annual growth rate of 48%; the balance of various loans RMB 1,339.1 billion, 1,348 times as great as the figure at the end of 1988, with a mean compound annual growth rate of 33%; the net capital RMB 242.6 billion, 588 times as great as the figure at the end of 1988, with a mean compound annual growth rate of 29%.
In support of its fast growth of business scale, the bank also witnessed excellent financial performance. Up to now, IB has kept being profitable for 25 years consecutively, and the annual net profits registered have kept growing significantly. Since its IPO (2007), IB has registered a total of net profits of RMB 111.987 billion in six years (2007-2012), with a mean compound annual growth rate of 44.59%, obviously higher than the business growth speed in the same period. In the first half year of 2013, IB accumulated the net profits totaling RMB 21.638 billion, keeping a YoY growth rate of 26.52%; the ROE was kept stably around 25%, long ranking front in the industry; the total cash dividends hit RMB 18.737 billion, with a proportion of dividends reaching as high as 18.07%, creating extraordinary value returns for investors. The asset quality of IB has always kept at the best level in the industry. By the end of June 2013, the non-performing loan ratio was only 0.57%, and the provision coverage hit 410.11%.
It is also noteworthy that IB has invested clinging efforts and made unremitting exploration in its differentiated business operation, and on that basis, formed its business structure and business features which are obviously different from other banks. Those people familiar with banking businesses may easily find that the asset-liability structure of IB is “exceptional”. The proportion of conventional deposit and loan businesses is significantly below the average level of the industry, and its asset-liabilities are more diversified, similar to those of the mainstream banks in the world. In correspondence, the business features of the Bank are more distinctive. For instance, its business of urbanization finance takes a mainstream position in the industry, boasting high competitive edges; its green finance and financial market businesses take a leading position in the industry.
With its strength increasing day by day, the reputation of IB is also on the increase. Relying on the fast and sound development of various businesses, and differentiated and characteristic business operation, IB now boasts a market position which keeps rising and a flourishing brand image. According to the 2013 list of “Top 1000 World Banks” released by the British Magazine, The Banker , IB rises to the 50 th place by 11 positions over the last year in terms of total assets, and ranks No. 2 among similar domestic banks; it ranks No. 55 in terms of Tier 1 capital, up by 14 positions over the previous year. According to the list of Global 500 of the US magazine, Fortune , IB makes its first presence in the list with its business incomes of USD 27.2479 billion, ranking No. 428. In recent years, in various appraisals organized by authoritative institutions both at home and abroad, IB has won a number of honors including the “Most Profitable Bank in Asia”, the “Best Joint-stock Commercial Bank”, the Champion of “Sustainable Asian Bank Prize”, the “Best Corporate Governance for a Financial Institution”, and the “Most Investable Listed Company”.
Excellent Management Guiding the Building of an Evergreen Undertaking
Against the relative disadvantages in location and shareholder background, why can IB stand out among other banks and take a mainstream position in the Chinese industry? This lies in its superior and effective management intrinsically besides the boost of China's Opening-up and Reform and sharing of the “bonus” brought by the economic growth of the country.
Prospective strategic judgment and forceful implementation of strategies. The “three-step” strategy established at the initial stage has built a sound development foundation. IB proposed to launch “second start-up” in 1996, carrying out trans-regional operation. In 2000, IB specified the aim to “build a national modern commercial bank”, accelerating the national development march. In 2004, IB took the lead to launch the strategic transformations regarding business development model and profiting model, pushing ahead the public listing. And in recent years, IB pushed ahead the reform of business line specialization and built a matrix-based operation and management system. IB could always grasp the changes in both internal and external situations, make strategic deployment prospectively, and carry out robust implementation uncompromisingly. In this way, the Bank can seize great opportunities all the time and avoid big risks.
Sensitive market response and outstanding innovation capability. Over years, IB has always been known in the market as a bank with acute market nose and business innovation capability ahead of others. From being the first to innovate in capital supplementation tools including subordinated debts and hybrid capital debts to being the first to develop the green finance market, and from being the first Chinese bank to adopt the “Equator Principles” to being the first to establish an institutional financial service platform…, IB has always taken the lead in the industry in many business segments to explore its own “blue sea”, thus forming powerful core competitiveness, accumulating rock-solid business and customer foundations and good market reputation.
A modern enterprise system conforming to the national situation and tallying with the operating rules of banking. As a bank coming into being as a result of China's financial reform, IB was born with the market-oriented gene. For years, it has adhered to the market-oriented orientation, establishing an efficient and flexible modern banking operation and management system and mechanism. From the implementation of the modern enterprise organization form, joint-stock system, to breaking through the models of “communal pot, iron rice bowl, and guaranteed leading post”, from consolidating and improving the head-branch system with one legal person and multi-level operation to exploring and establishing the new business operation system featuring the combination of blocks and strips and matrix-based management, and from establishing the institutional systems of modern commercial bank, covering management of asset-liability ratio, management of integrated business plans, risk management and internal control management, among the first group, to carrying out process reforging and system restructuring in an all-round way, the sublation and reform carried out by IB from time to time have enabled IB to seize the commanding height for the competition of modern banks and maintain blooming business vitality constantly.
Advanced and powerful operation support system. Fast and sound development cannot do away with the support of the operation system. IB is one of the first group of banks building an organizational structure with separated front, middle and back offices in line with the concept of process bank and adopting the business operation system featuring the combination of blocks and strips and matrix-based management. Its back-office operation system concentrated across the whole bank takes a leading position in the industry. With its core production system remaining at an advanced level, IB is one of the few banks with the independent core system research and development capability and independent intellectual property. It is the first bank building a “three-in-one” disaster recovery system integrating the main data center, local disaster recovery and non-local disaster recovery and one of the first group of banks reaching the internationally recognized Level 5 standard for disaster recovery in China. Many of its indexes including the key information system availability have remained front among similar institutions for many years.
Rational and practical corporate culture. With 25 years of accumulation, IB has formed a simple and harmonious “home culture”, prudent and sturdy “risk culture”, diligence-worshiping “struggle culture”, and sincere and win-win “service culture”, which constitute its powerful soft competitive strength. In addition, it has also attracted a professional finance group of high competence which is able to fight against hardship, and the stability of its core team has always been highly praised in the industry.
“Obtaining Reasonable Profits while Bringing Benefits to the Stakeholders” to Promote Scientific Development
“The flourishing of banks depends on the flourishing of other industries”, which is the idea that IB has upheld all the time. Over 25 years, IB has always taken it as a responsibility to serve the real economy and the social development, actively implemented the national economic development strategies and industrial policies at every stage, seized the development direction to adjust its business structure and improve its financial services, and met the financial service demands of hundreds of thousands of corporate customers and tens of millions of personal customers effectively, thus making contributions for the national and local economic construction.
What's noteworthy is the exploration and breakthrough made by IB in the performance of corporate social responsibilities. By combining the performance of corporate social responsibilities with the banking business model innovatively, IB has greatly enriched the practice of domestic banks in performing corporate social responsibilities, pushing the concept and connotation of banking social responsibility up to a higher level.
The exploration of IB to green finance could be called a typical model. From being the first to release the energy conservation and emission reduction loan in 2006, becoming the first Equator Bank in China in 2008, and setting up the first institution specialized in green finance in 2009, to issuing the first low-carbon credit card in China in 2010, IB has extended “green finance” from the field of enterprise project to that of personal consumption. In 2011, IB became the “Bank with the Best Green Financial Services across Asia”; in 2013, IB held a range of activities themed “Beautiful China Tour • Green Finance” … IB has, with its own innovation, exploration and model effect, driven the flourishing of China's green finance market, harvesting both economic and social benefits. By the end of this June, the Bank has accumulatively granted nearly RMB 286.2 billion of green finance based financing loans to over 1,000 enterprises, with the balance exceeding RMB 155.3 billion. The projects supported with such loans could save 23.2948 million tons of coal equivalent across China each year, reduce 67.157 million tons of CO 2 , and save 255.7906 million tons of water, and it is equivalent to shutting off 154 thermal power plants of 100 MW or stopping running 100,000 taxis for 32 years.
What's remarkable in the industry is the “bank-bank platform” of IB. Relying on its good foundation built in the field of institutional banking, the Bank innovatively released the bank-bank platform in 2007, mainly targeting at the small- and medium-sized financial institutions. Based on counter pass and network interconnection, the platform covers many services including payment and settlement, business agency, technology output and management training. Now, it has more than 400 signed customers and more than 23,000 connected outlets. Its scale effect and economic effect come into being increasingly. The platform plays an important role in helping small- and medium-sized financial institutions in the rural area to extend their service antennae, break through the payment and settlement bottlenecks, and enrich service categories, and serve the real economy and the “Agriculture, Rural Area and Farmers”.
IB has also spared no effort in the conventional public benefit cause. Over 25 years, it has accumulatively provided more than RMB 100 million to various public benefit projects. In 2007, IB donated RMB 10 million to set up “Industrial Bank Charity Grant”. In 2008, it donated more than RMB 20 million for the relief of Wenchuan Devastating Earthquake, and it was the first among the joint-stock banks to grant special loans for post-disaster reconstruction. In 2010, it donated RMB 15 million to the earthquake-attacked Yushu, Qinghai. In 2011, IB donated another RMB 10 million to set up “Industrial Bank Charity Grant”. In 2013, it donated a total of RMB 20.91 million to the earthquake-stricken area of Ya'an. It will make public benefit donations totaling RMB 30 million to Zhenghe County, Nanping from 2012 to 2015…
Now, more and more people recognize the social responsibility philosophy of “obtaining reasonable profits while bringing benefits to the stakeholders”, and this will become a firm guarantee for the scientific and sustainable development of IB's undertaking.
Taking Preventive Measures to Win Out in the Transformation Competition
With the increasingly accelerated economic transformation and upgrading, liberalization of interest rates and financial disintermediation, now the reform and development of domestic economy and finance is entering into a new historic stage. Can IB make new achievements in the new round of competition, President Li Renjie of IB gave a forceful answer, “we have already made full preparation, so we have great confidence”.
As the bank promoting business transformation in China at the earliest time, he introduced, IB has quietly made arrangement the gravity center and pattern of its new round of business development in the process of transformation, with remarkable effects being shown gradually.
On the one hand, integrated business operation has achieved great breakthroughs in succession, thus opening new development space. In 2010, IB established Industrial Financial Leasing Co., LTD, a solely-owned subsidiary; in 2011, IB controlled Union Trust Limited by purchasing its shares and renamed it China Industrial International Trust Limited; in 2013, Industrial Fund Management Co., Ltd. was established with the official approval of the China Securities Regulatory Commission (CSRC). In addition, China Industrial Asset Management Limited, a subsidiary controlled by Industrial Trust, and China Industrial Wealth Management Limited, a subsidiary controlled by Industrial Fund, were also approved in succession. Thus, a comprehensive financial service group has been formed basically, focusing on the principal banking businesses and covering trust, lease, fund, and assets management. On that basis, it is hopeful for IB to give a further boost to its group-based and integrated business operation in the future and drive a new round of fast and sound development.
On the other hand, the potential of business development has been built up constantly. In particular, IB has grasped the first opportunities and made prior arrangement in the areas, which represent the major directions of emerging businesses, including investment banking, wealth management, and asset management, etc. For instance, in the area of investment banking, IB has occupied certain shares in the market, accumulated rock-solid business and customer foundations and established a good market reputation. Across 2012, IB issued a total of 197 debt financing tools, a scale of RMB 201.243 billion, taking up a share of 7.64% in the market. In the first half of 2013, it issued a total of 110 debt financing tools, a scale of RMB 122.726 billion, taking up a share of 7.99%, ranking No. 2 both in terms of the number of enterprisers and the number of issues. For another example, in the area of assets management, depending on the operation institutions specialized in assets management and assets custody and subsidiaries specialized in trust, fund, and assets management, IB has basically built an assets management business platform with well-established structure and complete functions, becoming one of the few banks holding the licenses for all assets management related businesses. In addition, IB has also made all-round arrangements in the business areas including funds market, trade finance, cash management, private banking, financial services to small- and mini-sized enterprises, and retailing, which are hopeful to become the new business and profit growth points.
Hundreds of barges vie in speed for the upstream. Standing on the solid foundation built through the 25 years of frog-leap development and relying on the leading arrangements in business transformation, IB has a future that is more worth of expectation!