On August 28, Industrial Bank Co., Ltd. (IB) announced its half-year performance of 2015. By the end of the first half year, the total assets of the Company hit RMB 5,125.903 billion, and the net profits attributable to the shareholders of the parent company registered RMB 27.744 billion in total, up by 8.68% YoY, ranking front among similar listed banks which have announced their half-year reports of this year in terms of growth.
IB indicated that the Company has actively implemented the national macroeconomic policies and financial regulatory requirements, adhered to the main line of “maintaining steady development, guaranteeing security and boosting transformation”, grasped and adapted to the New Normal, kept enhancing the business structure adjustment, transformation and upgrading, accelerated its group-based, integrated and globalized business operation, and maintained steady and sound development in all businesses, with the business performance meeting the anticipation. In the future, it will stick to the development path characterized by “light capital, light assets, improved structure and high efficiency”, further push forward transformation and upgrading, and continue keeping a sound development momentum.
Steady development: desired indexes of net profit and cost/income ratio
Thanks to the steady development of various businesses, the Company witnessed a good financial performance in the first half year.
By the end of the first half year, the total operating income hit RMB 72.258 billion, a YoY growth of 21.63%; the net profits attributable to the shareholders of the parent company realized accumulatively amounted to RMB 27.744 billion, a YoY increase of 8.68%; the weighted average return on equity (ROE) and the return on total assets (ROA) registered 10.77% and 0.59% respectively, and the cost/income ratio was 20.76%, remaining at a desired level in the industry.
In the same period, the total assets of the Company hit RMB 5,125.903 billion, up by 16.33% over the beginning of this year; the balance of various deposits both in home and foreign currencies reached RMB 2,445.022 billion, up by 7.82%; the balance of various loans both in home and foreign currencies reached RMB 1722.946 billion, up by 8.15%. Offering the second issue of RMB preferred shares worth RMB 13 billion successfully, the group further reinforced its capital strength. At the end of the first half year, the equity belonging to the shareholders of the parent company reached RMB 288.023 billion, up by 11.67% over the beginning of this year, and the net capital hit RMB 353.932 billion, up by 7.65%. With a good asset-liability proportion, all main indexes of the Bank reached the regulatory requirements.
Optimized pattern: further reinforcement of group-based, integrated and globalized business operation
In the first half year, the group-based, integrated and globalized business structure of the Company was further reinforced.
Industrial Economic Research and Consulting Co., Ltd. was put into operation smoothly, becoming the first professional research institute with independent legal personality in the banking industry in China. Subsidiaries under Industrial Trust and Industrial Fund became more diversified and the group-based and integrated business operation structure was further strengthened. By the end of the first half year, the scale of assets under the management of Industrial Trust reached RMB 896.172 billion, up by 27.67% over the beginning of this year; the scale of financial leasing assets of Industrial Financial Leasing hit RMB 95.393 billion, up by 32.11%; and the scale of customer assets under the management of Industrial Fund registered RMB 315.195 billion, up by 61.82%. With fast arrangement in the small-value consumption credit market, Industrial Consumer Finance Co., Ltd. made a good start in business.
In addition, bringing into play the advantages of IB Hong Kong Branch and branch offices in the free trade zones effectively, the Company gradually formed an integrated development pattern covering domestic and overseas services, home currency and foreign currency services, and cross-border financial services.
Boosting transformation: significant achievements in improving business foundation and customer structure
In the first half year, the Company continued consolidating business foundation and speeding up transformation and development, witnessing obvious effect.
From the perspective of net interest margin, through the conventional deposit/loan interest spread went down on a year-on-year basis in the first half year under the influence of market-oriented interest rates, the overall net interest margin in the same period went up 4BP and the profitability was maintained thanks to the effective planning and management of asset-liabilities and prospective judgment.
Correspondingly, the asset-liabilities became more diversified and market-oriented, which can be seen in the following aspects: Loans kept growing steadily, with its proportion in the total assets going down to 33.61%. Adapting to the environment where the liquidity was easy and the market interest rates went down, the Company actively increased investment in bonds, non-standard debt assets of high returns in particular. The active liability tools which are innovative and based on market-oriented pricing increased substantially, and the NCDs and CDs offered both ranked front in the industry and among similar banks.
With further improved customer structure, the strategic core customers of corporate finance increased steadily, and industrial clusters of small-sized enterprises were formed more quickly. In the area of retail banking, taking it as a channel to develop the four brands related to life, the Company actively pushed forward the building of community banking outlets to extend the core retail banking customer group steadily. In terms of product structure, the Company vigorously boosted innovation in trading banking products. Cash management products, such as the “three direct expresses” of internet finance, capital pool, and bill custody, witnesses fast development, and new payment and settlement channels and application scenarios covering mobile payment, proximity payment, fast payment, etc., were further improved. Meanwhile, the Company actively followed up innovation in internet finance and carried out all-round strategic cooperation with advanced internet enterprises, with internet financial businesses, such as Money Manager, direct bank, cloud computing and big data service, keeping a desired development momentum.
The Company grasped market opportunities, adhered to multi-market and integrated business operation based on the diversified needs of various customers for financial services, and continued speeding up business innovation. With a closer business linkage between banking business lines and between parent companies and subsidiaries, it witnessed more obvious effects in mutual recommendation among customers, channel sharing, crossed sale, and capital and tax conservation, and further shaped business structure of “greater investment banking, greater wealth and greater assets management”.
Catching opportunities in the first half year, such as easy availability of funds, rising demands of wealth management products and active capital market, the Company stepped into a period of fast growth in the area of wealth management, seeing significant growth in both the offering volume and scale of wealth management products. By the end of the first half year, the balance of wealth management products of the Company hit RMB 1,403.044 billion, up by 68.00% over the beginning of this year, and the revenues from intermediary businesses gained from wealth management totaled RMB 4.526 billion, up by 33.39% YoY.
Guaranteeing security: the asset quality is stable in general, with intensified risk prevention and control
In the same period, the Company kept pushing the improvement of risk management system and mechanism, strictly defined the responsibilities for preventing and controlling non-performing assets, and spared no efforts in controlling the asset quality.
In risk control, the Company adhered to attaching importance to both “controlling the new” and “reducing the old”. Based on prospective analysis, pre-judgment and control of various risks, it intensified risk examination and elimination, and admittance and exit control with a view to controlling the incremental. Meanwhile, in the process of clearing and disposing non-performing loans and reducing assets in stock actively, it put forward pertinent solutions based on the risk features of different assets by resorting to the concepts and methods of investment banking. By the end of the first half year, the balance of the non-performing loans of the Company reached RMB 22.203 billion, up by RMB 4.659 billion over the beginning of this year, and the non-performing loan ratio hit 1.29%, increasing 0.19% over the beginning of this year. Risk provision was accrued strictly. The asset impairment reserve accrued in the first half year totaled RMB 15.846 billion, the provision coverage hit 221.21%, and the LLR/loan ratio reached 2.85%, with a generally sufficient provision coverage.
In the second half year, the Company will actively respond to new changes in both external and internal situation and adhere to a more sturdy business orientation. It will improve the business quality and efficiency, hold onto the multi-market and integrated development direction, and establish core business brands and competitive edges of the group. While pushing forward business transformation and upgrading unremittingly, it will stick to the development path characterized by “light capital, light assets, improved structure and high efficiency”. The Company will build a better well-built risk prevention and control system, continue grasping development opportunities on condition that risks are controllable, respond to challenges in an active manner, and build a solid foundation for the sustainability of business operation across the Bank.