ICBC reports 'stable' profits of $42.3 billion

Two residents waiting for an ICBC branch in Xuchang, Henan province, to open for business. Geng Guoqing / For China Daily

Bank penetrates overseas markets to stabilize profit and dilute risks

Industrial and Commercial Bank of China Ltd posted a net profit of 263 billion yuan ($42.3 billion) in 2013, up 10.2 percent from the previous year.

ICBC kept its asset quality stable, with adequate allowance and controllable risk, by focusing on preventing risks in industries with excessive capacity as well as in small and micro-enterprises that are more vulnerable to economic fluctuations.

"We will continue to tweak our asset-liability mix and to guard against possible credit risk so as to maintain good asset quality this year," said Yi Huiman, the bank's president, at a press briefing on Thursday.

At the end of 2013, the balance of the bank's loans to local government financing vehicles fell by 94.3 billion yuan from the previous year. There were no new non-performing loans in the sector during 2013, and the NPL ratio of LGFV fell by 0.24 percentage points to 0.15 percent.

The balance of real estate development loans dropped by 8.6 billion yuan, and the NPL ratio was down by 0.03 percentage points to 0.72 percent.

"We make detailed assessments not only of property developers but also of different geographical areas and different cities. After the appraisal has been completed, we will have a list of the developers and the cities that ICBC will accept," said Wei Guoxiong, chief risk officer of the bank.

He noted that ICBC will observe case by case and require different proportions of capital for the property developers according to the risks involved. Its requirement for their capital is 10 or 20 percentage points higher than the national standards.

ICBC stepped up scrutiny over the distribution of third-party trust investments earlier this year after China Credit Trust failed to repay final year interest on a 3 billion yuan trust loan sold via ICBC.

Yi said it's quite normal to have one or two cases of delinquency, and he emphasized that "the key issue here is how to ascertain responsibilities among participants".

The bank has combed through its agency collection and repayment of money projects one by one, and it found that the risks are manageable. At the end of 2013, the value of these businesses totaled 11.7 billion yuan and involved 24 projects.

"We believe, in essence, that the distributor does its due job, and then the investors shoulder responsibility for the losses. Therefore, we shoulder no responsibility for the implicit guarantee of repayment of either the principal or the interest," Yi said.

To stabilize profit and spread risks, ICBC also continued to penetrate overseas markets and strengthened its customer service capability globally.

At the end of 2013, total assets of the bank's overseas institutions reached $209.16 billion, increasing 28.5 percent from the previous year. Profit before tax also rose 33.5 percent to $2.23 billion, with the growth rate considerably exceeding that of the bank's domestic business. The NPL ratio of overseas institutions was maintained at a low level of 0.49 percent.