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The Industrial and Commercial Bank of China (ICBC), the country's top lender, is seeking licenses for investment banking, insurance and leasing to make up for shrinking profit margins as a result of higher interest rates, its chairman said. "Our corporate clients will have cheaper alternatives for fundraising that will reduce their reliance on bank loans," said the bank's chairman, Jiang Jianqing. China's banking authority, for the first time in the last 14 years, raised deposit rates over lending rates last month, forcing banks to create more diversified financial services. The ICBC, listed both in A- and H-share markets, has seen its shares fall 18 percent this year in Shanghai and has had a lukewarm performance in Hong Kong. "With a huge influx of foreign banks in China under the WTO agreement, mainland banks ought to seek more diversified financial services to secure their market footprint," said Zhang Xubing, assistant professor in the department of management & marketing at the Hong Kong Polytechnic University. Mainland banks should learn to better market themselves with more attractive and diversified financial products and services, Zhang said. Lenders on the mainland rely heavily on interest spreads - the difference between deposit and lending rates. Non-interest income accounted for 10 percent of the ICBC's revenue last year and 18 percent for Bank of China. Among US banks, the ratio was 43 percent in 2005, according to China's banking regulator. The regulator wants the ICBC and other large State-owned banks to triple the share of their revenue from fees and commissions in the next five to 10 years. The ICBC plans to open 3,000 wealth management centers in the next three years to meet the increasing demand fueled by the fast-growing economy and rising incomes. The Beijing-based group will open about 1,000 wealth management outlets this year at a cost of about 1.1 billion yuan, Jiang said after the company's annual general meeting in Hong Kong yesterday. The bank has opened several hundred branches in the first quarter of this year, Jiang said. (China Daily June 13, 2007) |
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