“Currently, China has entered a new stage of promoting the construction of Chinese-style modernization through high-quality development. ‘Value-oriented enterprises’ will assume more responsibilities and play a greater role in China’s capital market and economic development.” On December 5th, Chen Xinjian, the President of Industrial Bank, expressed this view when he was invited to attend the 2023 Hong Kong Investor Communication Event hosted by the China Association for Public Companies.
“Times have shaped Industrial Bank and many outstanding companies in China.” Chen Xinjian said that this year marks the 35th anniversary of the establishment of Industrial Bank. Over the past 35 years, Industrial Bank has resonated with the Chinese economy, growing together with the Chinese capital market. In 2004, it introduced overseas strategic investors and completed its A-share listing in 2007. Since the listing, it has accumulated approximately 172 billion yuan in dividends, exceeding 86.7 billion yuan in equity financing. Through retaining profits to supplement core tier-one capital of nearly 580 billion yuan, it has rapidly developed through positive interactions with the capital market, achieving mutual growth and a win-win situation for its own value and societal value.
Around the aspects of reshaping the balance sheet of Industrial Bank, polishing its “Three Pillars of Our Business,” developing its “Five New Tracks”, building a “Digital Industrial Bank” (Digital IB), and ensuring stable asset quality, Chen Xinjian shared his practical experience and insights about building a “value bank” at Industrial Bank. He also called on listed companies to join hands in integrating into the new era’s theme, creating value-based enterprises, and making greater contributions to the high-quality development of China’s capital market.
First, accelerate the transformation and reshape the balance sheet. Faced with changes in the external environment, Industrial Bank proactively seeks change, proposing a reconstruction of its balance sheet. This involves enhancing the quality and efficiency of serving the real economy, acquiring high-quality customers and assets, and continuously stabilizing asset returns and improving the liability structure. This year, Industrial Bank’s corporate clients reached 1.39 million, retail clients surpassed 100 million, and its interbank clients exceeded 3,700. The pyramid-shaped customer structure, with a “strong top, robust middle, and stable bottom,” has been further optimized. Meanwhile, the performance of both the volume and price of deposits and loans has been outstanding. In the first three quarters, the increment of deposits and loans ranked first among joint-stock banks, and the cost of RMB deposits decreased by 11 basis points year-on-year, while net interest income increased by 1.09% year-on-year. Through transformation and reconstruction, Industrial Bank has effectively achieved a balance between serving customers, scale growth, structural optimization, and enhanced efficiency.
Second, establishing distinctiveness and enhancing the “Three Pillars of Our Business”. Industrial Bank continues to cultivate the “Three Pillars” of Green Banking, Wealth Bank, and Investment Bank. This approach not only aligns closely with the strategy of “light assets, light capital, and high efficiency” but also serves as a crucial lever for Industrial Bank to serve the real economy and share the dividends of development. In terms of Green Banking, as China’s first “Equator Bank”, Industrial Bank is accelerating the promotion of green industry development and wholeheartedly serving the “dual-carbon strategy”. The group’s scale of the green financial business has reached 1.89 trillion yuan, with green loans totaling 775 billion yuan, ranking first among joint-stock banks. Additionally, it continuously shares its green and ESG experiences externally, assisting more companies in establishing carbon accounts and ESG management systems. Regarding Wealth Bank, leveraging the advantages of asset management and interbank channels, Industrial Bank has maintained its leading comprehensive wealth management capabilities in the industry for 23 consecutive quarters. Its wealth management scale has reached 2.2 trillion yuan, ranking second among domestic banks. Simultaneously, it continues to deeply cultivate pension finance and currently serves over 23 million elderly clients. In the Investment Bank area, leveraging the advantage of multiple licenses within the group, Industrial Bank has formed a “Commercial Bank + Investment Bank” network through underwriting, investment, and circulation, and has grown together with various ecosystems. Currently, Industrial Bank’s underwriting scale of domestic and foreign credit bonds remains at the forefront of the market. It completed seven out of twelve REITs transactions in the entire market this year, and actively participated in mergers and acquisitions in emerging industries such as semiconductors, new energy, and photovoltaics. While meeting the diverse financial needs of its clients, it has also achieved favorable comprehensive returns.
Third, responding to the trend and laying out the “Five New Tracks”. In response to the shift in China’s economic development from the old triangle cycle of “real estate-infrastructure-finance” to the new triangle cycle of “technology-industry-finance”, Industrial Bank proposed in 2022 to accelerate the layout of the “Five Major New Tracks” of inclusive finance, technology innovation finance, energy finance, automotive finance, and industrial park finance. At the same time, in order to adapt to the particularities of enterprises in the new tracks, Industrial Bank innovatively introduced the “Chain Leader Institution” marketing service model and the “Technology Stream” financing approval model, effectively driving the development of related businesses. Since the beginning of this year, corporate loans in the “Five New Tracks” have achieved double-digit growth. In particular, since the implementation of the “Technology Stream”, financing demands approved based on this model have exceeded 2.3 trillion yuan, of which over 600 billion yuan has already been disbursed.
Fourth, embracing technology and creating “Digital IB”. In response to the development of industry digitalization and digital industrialization, Industrial Bank is accelerating its digital transformation, advancing a series of reforms in the technology sector, and implementing the Ten Thousand Talents Plan for technology professionals. It has achieved several accomplishments, such as obtaining the qualification as a designated operator for E-CNY. Additionally, Industrial Bank actively constructs a financial service architecture that aligns with the digital economy, promotes the deep integration of the digital economy and the real economy, and serves the modern industrial system. As an example, in 2019, with strong support from the Fujian provincial government, Industrial Bank began the construction and operation of the Fujian Financial Service Cloud Platform, focusing on inclusive finance. Currently, the platform has 370,000 registered users and has provided nearly 300 billion yuan in financing. The innovative “IB Inclusive Finance Platform” has been integrated with over 826 external scenario platforms nationwide, involving a financing amount exceeding 255.1 billion yuan. It effectively addresses the difficulties and high costs of financing for small and medium-sized enterprises. In this process, Industrial Bank has also significantly enhanced its technological output capabilities. It has assisted regions such as Ningxia, Yunnan, and Liaoning in building similar platforms, which have become important local financial infrastructures, achieving positive social and economic impacts.
Fifth, safeguarding the bottom line and maintaining stable asset quality. The bottom line of bank operations is to manage risks, reduce the erosion of risk costs on operational efficiency, and develop a more resilient ability to create value. This year, Industrial Bank has established specialized teams to focus on key risk areas, strengthen source control, and increase efforts in loan recovery, resulting in positive outcomes. In the first three quarters, the new non-performing loans in the real estate and government financing sectors decreased by 73% and 84% respectively compared to the same period last year. The forward-looking indicators of new non-performing loans in the credit card sector also showed a marginal decline, indicating overall stable and controllable asset quality.
Based on the continued establishment of a “value-oriented bank” by Industrial Bank, creating value for customers, employees, partners, society, and shareholders, in the latest MSCI ESG rating, Industrial Bank has been upgraded from A to AA, making it the only bank in China to achieve the highest rating for five consecutive years. Furthermore, it has once again been honored with the “Bank of The Year 2023 in China” award by The Banker magazine, marking the second time that Industrial Bank has received this prestigious global banking award after its initial win in 2021.
It is reported that this event was hosted by the China Association for Public Companies, with strong support from relevant government departments, the Hong Kong Exchanges and Clearing Limited (HKEX) and other parties. More than 30 senior executives from A-share listed companies and nearly 100 leaders from overseas investment institutions were invited to participate, in order to promote positive interactions between overseas medium- to long-term funds and outstanding domestic listed companies.