Industrial Bank (IB) released the half-year report of 2014. In the first half year, in confrontation with the increasingly complicated and austere business environment, the Company actively implemented the national macroeconomic policies and financial regulatory requirements, took initiative to adjust the business tactics, laid stress on structure adjustment and quality improvement, and pushed forward reform deepening, transformation and upgrading. In this way, the Company responded to the impacts and challenges brought by changes in outside environment in a desired manner and maintained steady development in all businesses, with the general business performance meeting the anticipation. Based on sufficient provision and accrual, the net profits attributable to the parent company realized by IB accumulatively in the first half of 2014 amounted to RMB 25.527 billion, a YoY increase of 17.97%. The basic earnings per share hit RMB 1.34, and the net asset value per share RMB 11.57.
Steady business development and considerable profitability. By the end of the first half year, the total assets of the Company hit RMB 3,948.200 billion, up by 7.36% over the beginning of this year; the balance of various deposits both in home and foreign currencies reached RMB 2,246.522 billion, up by 3.51%; the balance of various loans both in home and foreign currencies reached RMB 1,430,974 billion, up by 5.45%. The capital adequacy ratio met the requirements of the new regulatory regulations. At the end of the first half year, the net capital hit RMB 300.742 billion, with the core Tier 1 capital adequacy ratio and the Tier 1 capital adequacy ratio reaching 9.35% and the capital adequacy ratio hitting 12.18%, rising 0.67% and 1.35% over the beginning of this year respectively. With a good asset-liability proportion, all main indexes of the Bank satisfied the regulatory requirements. In the first half year, the total operating income registered hit RMB 59.408 billion, a YoY growth of 11.12%; the net profits attributable to the parent company realized accumulatively amounted to RMB 25.527 billion, a YoY increase of 17.97%; the weighted average return on equity and the return on total assets registered were 11.90% and 0.67% respectively, both remaining at a desired level. The group-based integrated business operation witnessed steady progress, and the scales and benefits of Industrial Bank Financial Leasing Co., Ltd., a wholly-owned subsidiary, and Industrial Trust and Industrial Fund Management, two subsidiaries under the control of IB saw stable growth.
Adaption to changes, elevation of management. In response to the trend of slowdown in macroeconomic growth rate, the Company adhered to intensifying the control of security and liquidity, and easing the need of scale growth. Considering the Company’s situation and changes in market liquidity at different stages, the Company kept adjusting and improving the policies on management of asset-liability proportion of all business lines, management of loan scale and funds transfer pricing (FTP), and controlled the development pace reasonably. The Company laid more stress on intensive business operation and return on capital, adjusted and improved the measures for management of economic capital, improved the benchmark value of economic capital allocation coefficient and anticipated ratio of return on economic capital, and strengthened capital restriction. In combination with adjustment of business strategies, the Company adjusted and improved the allocation plan of financial resources, and gave prominence to core position of net incomes and economic value added in the allocation of financial resources after capital adjustment. The Company controlled the total financial expenditure, focused on the improvement of financial expenditure structure, and constantly increased investment in businesses with strategic advantages, characteristics businesses and construction of various infrastructure. Meanwhile, the Company controlled the increase of fixed cost characterized by relative rigidity. At the end of the first half year, the cost/income ratio was 21.52%, down 1.64% YoY.
Grasping opportunities and intensifying innovation. The Company actively broadened the sources of liabilities, issuing interbank negotiable certificates of deposit totaling RMB 29.040 billion. While accelerating the process of sinking the customer service focus, the Company preliminarily established a specialized operation system for small-sized enterprises, and the balance of balance of self-defined loans for small- and mini-sized enterprises hit RMB 90.517 billion at the end of the first half year, up by 24.18% over the beginning of this year. The Company stuck to the expansion of community banks at low cost, witnessing the scale effect preliminarily. Taking it as a main grab to reform the business governance system and improve business linking mechanism, the Company further reinforced the business pattern of greater investment banking, greater wealth and greater assets management. Considering the accelerated innovation in internet finance, the Head Office officially established the Internet Finance committee, with a view to strengthening the coordinative management and organizational leadership over the development of internet finance across the Bank, and actively pushed forward innovation in internet finance. The Company entered into an exclusive strategic cooperation agreement with Baidu.com. The Company smoothly launched the internet wealth management brands including “Money Manager”, “Manager’s Wallet” and Direct Bank, which received desired market response. By the end of the first half year, the number of customers signed on line with “Money Manager” hit 677,400, the online sales of wealth management products hit nearly 149 billion, and the product scale of “Manager’s Wallet” rose to RMB 51.934 billion.
Intensifying Risk Control and Maintaining Quality. The Company carried out rounds of risk screening for key industries, regions, customers and products in an all-round way to ensure the security of assets. The Company exerted great efforts to dispose non-performing assets by adhering to taking different measures such as clearing and recovering, transfer, writing-off, and restructuring. Centering on the implement of the new capital accord, the Company pressed on with building an advanced risk management mechanism to improve the entire bank’s refined risk management and intensive capital management. The Company improved the compliance and internal control assessment system and built up correct business directions and culture. In a period in which three stages (the gear-changing stage of growth speed, the “birth pang” stage of restructuring and the stage of digesting the incentive policies in the previous period) of development overlapping in China’s economy, business development also faces considerable difficulties, and the non-performing loan ratio goes up to some extent, being restored from the extreme low state in the past to the current normal state. The Company, nevertheless, still kept the general asset quality at a reasonable level based on prospective analysis, prejudgment and effective control of various risks. By the end of the first half year, the non-performing loan ratio was only 0.97%, 0.21% higher over the beginning of this year; with sufficient provision and accrual, the LLR/loan ratio rose to 2.96% and the provision coverage reached 305.74%.
In the second half year, the Company will improve the asset-liabilities tactics, encourage the development of superior asset businesses, extend the sources of liabilities through multiple channels, and speed up the process of sinking customer service focus. Centering on the improvement of specialized business operation capacity, the Company will, in a reliable manner, push forward the reform in the governance systems for institutional banking, capital business, industrial finance, and internet finance. The Company will further intensify coordination and linkage and create the business pattern of greater investment banking, greater wealth and greater assets management constantly. The Company will reinforce risk and internal control management in all-sided manner, and enhance the business culture characterized by compliance, steadiness and preciseness.