In 2017, the Bank achieved a net profit of RMB287.5 billion, representing an increase of 3.0% compared with last year, and 2.5 percentage points higher than the growth rate of last year. The total net profit remained the best in the global banking industry. The profit before provision reflecting the growth of the business reached RMB492.4 billion, representing an increase of 9.1%. Profitability is the final result and comprehensive reflection of operation and management, and its improvement mainly comes from three aspects.
First, the effect of transformational innovation. The rapid emergence of new growth momentum has become the main driving force for profit growth. For example, the contribution of operating income from mega retail and the financial markets businesses continued to increase; the net profit of overseas and controlled institutions increased by 12.6%.
Second, the effect of quality improvement. The NPL ratio dropped by 0.07 percentage points from the end of the previous year to 1.55%, which was the first time to achieve the “single drop” since the “double increase” of non-performing ratio and non-performing loans in 2013.
Third, the effect of cost control. Net interest margin (NIM) increased by 6 basis points to 2.22% from the previous year, and the improvement of the deposit structure effectively reduced interest payment costs. The cost-to-income ratio was 26.45%, remaining at a good level among our peers.
Despite being faced with complicated contradictions and increasing risks and challenges, the Bank was able to achieve the operation results better than planned, better than the same period of previous year and better than expected, and maintained a stable and steady development trend, benefitting from always being able to maintain clear minds and strategic composure, observe the overall trend, implement practical work, and coordinate efforts to carry out initiatives such as strengthening entities, controlling risk and promoting reform.
First, the Bank improved the quality and efficiency of serving the real economy. It closely centered on development of the real economy and the supply-side structural reform, improved the investment and financing integration service mechanism and business layout, enhanced the level of financial service provision, promoted the growth of real economy in terms of “volume”, “size” and “quality”, and promoted the virtuous cycle of the real economy and business development. During the year, RMB2.8 trillion loans were extended, of which RMB1.87 trillion was recovered and re-extended; the incremental volume of non-credit financing also exceeded RMB1 trillion.
The Bank served the “13th Five-Year Plan”, “four regions”, “three supporting belts” and construction of Xiong’an New Area, and stepped up its support for key projects and programs. RMB1.14 trillion of domestic project loans were extended accumulatively, increased by RMB193 billion compared with the same period last year. It recently supported 123 “Going Global” projects with total loan amount of USD33.9 billion. The Bank successfully issued the Belt and Road green bonds and led the establishment of the Belt and Road Inter-bank Regular Cooperation Mechanism. It sets up the Inclusive Finance Department, and demonstrated the assumption of responsibility as a big bank in areas such as supporting small and micro businesses, “agriculture, rural areas, and rural residents”, “business startups and innovation” and poverty relief. Small and micro loans increased by 9%, completing the “three not-less-than” regulatory target, and the outstanding loans for targeted poverty relief exceeded RMB100 billion. Overcapacity was reduced steadily and orderly; excessive inventory was reduced in line with the policies of different cities; deleveraging was supported with various measures so as to better serve the fundamental task of supply-side structural reform.
Second, the Bank strictly guarded the risk bottom line and the security line. The Bank has always regarded risk prevention and control as a must-win battle. Adhering to bank governance with strict discipline and governance by experts, the Bank coordinated risk management and control of credit risks and cross risks, on-balance sheet and off-balance sheet risks, domestic and overseas risks, and incremental volume and existing volume, and strengthened and consolidated the risk management in the “high-risk period” and “deep-water area”. The overall quality of credit assets improved. “Scissors difference” between overdue and non-performing loans fell by more than 50%, and the overdue rate dropped 0.64 percentage points while the allowance to NPL soared to 154.07%.
The Bank improved the full-chain, full-type and full coverage risk management system, strictly controlled the gate keeping of cross risks, and defined and implemented new management requirements. It solidly carried out comprehensive remediation on various types of risks, strengthened the risk elimination and remediation accountability, and essentially achieved the regulatory target of “reduction of total number of incidents year-on-year and absence of major vicious incidents or risk events”.
Third, the Bank focused on strengthening the growth momentum through business transformation. The Bank insisted on both transforming and upgrading the traditional momentum for growth and cultivating and expanding new growth momentum, and consolidated the profit growth framework of multi-source power and multi-point support. Benefiting from the solid customer base and active service improvement strategy, domestic RMB deposits increased by RMB1.35 trillion despite increasingly tightened social liquidity, which created the best comparable record over the past ten years among the banking sector.
The mega retail strategy continued to grow with the net increase of individual customers amounting to 38.00 million, which was the highest in recent years. Among them, the number of credit card customers increased to 88.59 million, making the Bank the largest domestic credit card issuing bank. The businesses of mega asset management and mega investment banking were in line with regulatory requirements and changes in the environment, maintaining sound and stable development.
Among them, income of asset management business continued to increase, nearly 1,500 branded investment banking projects were completed, and the Bank ranked first by number of merger and acquisition deals in the Asia-Pacific region for four consecutive years. The Bank steadily promoted internationalized operations and diversified development, and the overseas service network extended to 419 institutions in 45 countries and regions.
Fourth, the Bank focused on stimulating business dynamism through reform and innovation. The reform presented comprehensive development force, in-depth advancement and multi-point breakthrough. Especially in implementing reforms in areas such as liberalization of interest rates, solving difficulties of troubled banks, improving competitiveness in key cities, personnel structure adjustment and optimization of outlet layout, as well as deepening innovation in terms of resource allocation, business authorization, evaluation and assessment, risk management and control and system processes, we further enhanced the vitality and creativity at all levels and in all fields.
The Bank combined the development pattern of internet technology with the nature of financial services, and focused on building the “Intelligent Banking”. The Bank accelerated the innovation in FinTech, established the Internet Finance Department, implemented the e-ICBC 3.0 strategic upgrading and established the “Seven Innovative Laboratories”, which embodied the new image of the development of internet finance.
In 2017, the Bank maintained its globally leading position in various core indicators, and ranked the 1st place among the Top 1000 World Banks by The Banker, ranked 1st place in the Global 2000 listed by Forbes and topped the sub-list of commercial banks of the Global 500 in Fortune for the fifth consecutive year, and took the 1st place among the Top 500 Banking Brands of Brand Finance for the second consecutive year.