China's largest State-owned commercial bank yesterday reported a
hefty rise in its operating profit for 2003, further strengthening
its financial base as it moves closer to a planned public stock
offering.
The Industrial and
Commercial Bank of China's (ICBC) profit for last year came in
at 62.1 billion yuan (US$7.5 billion), a jump of 40 per cent from
the previous year, it said.
A total of 60 billion yuan (US$7.2 billion) out of that profit
was set aside as bad loan provisions or for write-offs.
Larger profits, which can boost a bank's capital base, are
greatly needed by the bank, which is widely believed to be the next
to win a State-sponsored capital infusion after the Bank of China
and China Construction Bank each got a US$22.5 billion injection at
the end of last year.
The two banks were recently chosen for pilot joint-stock
restructuring under a government-orchestrated reform scheme for the
nation's four largest State-owned commercial banks, which also
include the Agricultural Bank of China.
The pilot banks and ICBC are believed to be targetting initial
public offerings no later than 2006.
Insiders said ICBC had lost out to its two smaller peers in the
race to win the pilot bank status when it failed to meet a
criterion requiring total capital to be greater than losses.
The bank also announced a 1.24 per cent return on assets (ROA)
and a 38.3 per cent return on equity (ROE) for last year, which are
both the best in the bank's 20-year history.
The bank managed to reduce its outstanding non-performing loans
by 43.3 billion yuan (US$5.2 billion) last year, a fall of 4.3
percentage points from the end of 2002.
The ratio of non-performing loans, by the internationally
accepted five-category classification, stood at 21.3 per cent at
the end of last year, it said. Deposits increased by 509.8 billion
yuan (US$61 billion) while outstanding loans rose by 391.1 billion
yuan (US$47 billion), or 13 per cent, from the end of 2002.
The bank attributed the improvement in profitability and asset
quality to a "sound macroeconomic situation," effective supervision
by regulators and its campaign to readjust its business
structure.
An ICBC spokesperson underlined an improvement in the bank's
income structure. Out of its 108.1 billion yuan (US$13 billion) of
net income last year, intermediary business and investment return
accounted for 33 per cent.
(China Daily January 10, 2004)