The Industrial and Commercial Bank of China (ICBC) said yesterday it will see double-digit loan growth again this year, despite a tighter credit policy.
"Full-year loan growth for last year was 10.8 percent," Jiang Jianqing, ICBC chairman, told reporters after a ceremony marking the bank's acquisition of Seng Heng Bank in Macao.
He expects the bank to maintain steady loan growth at the same pace this year. It has posted 10 percent growth for the past five years.
Jiang also said the intermediary business, a fresh income source the bank is trying to develop, has grown rapidly. "We will not rely just on loan growth."
Jiang confirmed that the bank has $1.2 billion in subprime-related investment, all rated AA or above.
The bank will calculate its subprime provision prudently, he said. The scale of provision for the fourth quarter will be more than for the third, but profit will still increase by over 60 percent after the provision, Jiang said.
He did not comment on other mainland banks' exposure to the subprime mortgage crisis. But he believes its direct impact on mainland banks will be small.
ICBC recently acquired Macao's Seng Heng Bank (SHB) from Sociedade de Turismo e Diversoes de Macau, a gaming business owned by Stanley Ho.
ICBC bought a 79.9 percent holding in the bank for 4.68 billion patacas. It is ICBC's second overseas acquisition after Indonesia's Bank Halim.
"The SHB stake purchase constitutes an important strategic move by ICBC to achieve an international presence, especially in the Hong Kong-Macao-Zhuhai region," said Jiang. "The acquisition has created strong synergy."
"SHB can act as a window for ICBC to capitalize economic growth in the region," said Zhu Xiaoping, chairman and executive director of SHB. He said ICBC will upgrade SHB's IT system and enhance its risk management. Its wealth management and clearing and settlement business will also be strengthened.
Patrick Huen, a shareholder and vice-chairman of SHB, said the acquisition will give SHB access to the mainland market through ICBC, which has the largest amount of deposits.
"While we can act as a platform for our clients from Portugal on the mainland, ICBC will be able to reach European clients through us," said Huen.
The bank's chairman said it will continue to acquire overseas banks. "ICBC will follow our clients in going overseas," said Jiang, adding that strategic importance and synergy are the bank's top priorities in finding acquisition targets.
"We are not focusing on financial investment, so low valuation is not a factor for ICBC's acquisition targets," said Jiang, referring to the possibility of buying subprime-battered banks in the US and Europe.
(China Daily January 29, 2008)
