Industrial and Commercial Bank of China Limited announced today its results for the first three quarters of 2010. Based on International Financial Reporting Standards, ICBC's profit after tax for the first three quarters was RMB 127.8 billion, up 27.1% from the same period of last year.
Its earnings per share was RMB 0.38. Stable profit growth has resulted in steady increase in investment return for shareholders. The annual return on average assets and the weighted average return on equity reached 1.35% and 23.69% respectively, increasing by 0.15 percentage point and 3.54 percentage points from the end of 2009.
Since its capital restructuring and listing, ICBC has been maintaining a relatively fast pace of earnings growth, in spite of the complexity of the business environment and the economic climate. The compound annual growth rate of its profit after tax reached 37.4% during 2006 through to 2009 – making it one of the fastest growing large banks in the world. In 2009, ICBC maintained a stable positive growth in profit despite the global financial crisis during which many domestic and overseas banks experienced a decline in profit. With a higher base for comparison, ICBC still achieved a strong growth in profit this year. The Bank's 27.1% growth in profit after tax during the first three quarters was achieved following last year's 8% growth. This fullly reflects the ability of the bank's business and development model to counter economic fluctuations, and the stability and sustainability in its profit growth.
As its successful business suggests, ICBC continued the growth trend it enjoyed in the first half of the year into the third quarter, maintaining a fast and healthy pace of growth. ICBC's deposits from customers increased by RMB 1.5113 trillion during the first 9 months of the year, maintaining its position as the bank with the largest amount of customer deposits in the world. In terms of lending, ICBC maintained a rational and balanced pace in providing loans, while at the same time it accelerated the adjustment of its loan portfolio. It adhered to the government's macro-economic control policies and continued to support the real economy. During the first 9 months of the year, ICBC's domestic renminbi loans increased by RMB 707.7 billion, representing a growth of 13.3%. 95% of its newly extended loans for project were provided to projects under construction or ongoing projects. In terms of the industries, substantial supports were given to the key industries that are being revitalized, emerging industries of strategic importance and green industries such as energy saving and pollutant reduction ones. ICBC has also proactively expanded its small business loans and trade financing businesses. As at the end of September 2010, its small business loans balance reached RMB 427.0 billion, an increase of 37.4%, i.e. RMB 116.2 billion from the beginning of this year. Trade financing loans increased by RMB 114.1 billion, representing a growth of 36.62%. The proportion of trade financing loans balance increased to 29.39% of total working capital loans, 1.43 percentage points higher than the end of June. Domestic renminbi personal loans increased by RMB 343.2 billion, which was RMB 79.6 billion more than the same period last year, and were mainly provided to individuals for purchasing their first homes and other reasonable consumer demand. To better meet the government's macro-economic control requirements, ICBC reduced its real estate development loans by RMB 8.28 billion from the end of June.
As ICBC adjusted and optimized its loan portfolio, the Bank's loan yields has been increasing , contributing to a steady increase in net interest income. In the third quarter, ICBC's net interest income reached RMB 78.4 billion, RMB 3.4 billion higher than the second quarter. Net interest margin rebounded to 2.40%, which was 14 basis points higher than that at the end of 2009, and 3 basis points higher than that at mid-2010, demonstrating the continual improvement of efficiency in asset allocation and profitability of the Bank.
Meanwhile, ICBC achieved further improvement in asset quality, with both the non-performing loans balance and the NPL ratio declined for the 11th consecutive year. As at the end of September 2010, ICBC's NPL ratio decreased to 1.15%, down 0.39 percentage point from the end of 2009. At the same time, the provision coverage ratio rose significantly to 210.16%, an increase of 45.75 percentage points from the end of 2009, which further enhanced the Bank's capability to withstand risks.
The intermediary business of ICBC, another driver for the Bank's business development, also achieved robust growth. As its market competitive advantages further solidified and strengthened, the Bank's intermediary business has become an important source of profit and core competitiveness. In the first three quarters of 2010, ICBC's net fee and commission income reached RMB 54.6 billion, representing a year-on-year increase of 32.9%, accounting for 19.6% of the Bank's total revenue, up 1.4 percentage points from the end of 2009. With an income of RMB 12.1 billion in the first three quarters of the year, the bank's investment banking business, a leader in its market, has become one of the most important sources of intermediary business revenue.
The sales volume of personal and corporate wealth management products increased by 96.8% and 24.2% on a year-on-year basis respectively, the highest among Chinese banks. The amount of lead underwriting of short term financing bills and medium term note reached RMB 179.673 billion, the leader in its market. The Bank was leading its competitors by a relatively wide margin with the number of credit cards issued, card spending and overdraft accounting for 41%, 36% and 37% of the market respectively. Meanwhile, ICBC's credit card NPL ratio was only 1.12%. Achieving a cumulative amount of over RMB 40 billion, the Bank's cross-border renminbi business has been growing strongly, and the Bank has the largest amount of renminbi purchase-and-sale business and the largest number of renminbi current accounts opened among Chinese banks.
The volume of precious metals business transactions exceeded 6000 tons, and the suite of products now comprises nearly 100 kinds in four categories, namely physical, trading, financing and wealth management, making ICBC the domestic commercial bank with the most comprehensive range of precious metal products. ICBC's electronic banking business further demonstrated its role as a crucial transaction channel for the Bank, handling 56.8% of the Bank's total number of transactions, an increase of 2.2 percentage points from the end of June 2010.
While steadily developing its domestic core business, ICBC has also been keeping pace with the Chinese enterprises expanding overseas by developing both its overseas business and international business offered in the domestic market, enhancing its overall service capabilities to clients worldwide. As of the end of September 2010, ICBC has established 194 overseas branches and subsidiaries in 27 countries and regions, which has further strengthened its global business network and enriched its comprehensive range of services, laying a strong foundation for its strategic development going forward.
Meanwhile, ICBC has made great progress in the development of its integrated business operations. In regards to the Bank's overseas investment banking business, ICBC International was the only Chinese investment bank appointed in the new share issuance of Petrobras as a global joint bookrunner, and was also a global joint bookrunner and financial advisor for the initial public offering of AIA, which was the largest IPO in the Hong Kong market. ICBC International's market position in the international investment banking industry has been enhanced substantially.
International and integrated business operations will become strong drivers for the future development of ICBC. These will not only optimize the Bank's income source structure and strengthen its profitability, but will also enable the Bank to serve the clients under a "one-stop-shop" model, thus advancing the overall service capacity and competitiveness of ICBC.