Leading bank reports 40 percent growth in profits

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Last updated at: (Beijing Time) Friday, January 09, 2004

Leading bank reports 40 percent growth in profits

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The Industrial and Commercial Bank of China (ICBC), one of the country's four biggest banks, announced on Friday an increase of 17.8 billion yuan (2.17 billion US dollars) in profits to 62.1 billion yuan (7.57 billion US dollars), up 40 percent year-on-year.

The bank, one of the four state-owned banks, has maintained rapid growth in profits for four consecutive years with rates ranging from 27.7 percent to 24 percent, while its total operating profits stood at 150 billion yuan (18.2 billion US dollars), said a statement from the bank.

In the past year, the bank's assets profit margin and capital profit margin reached record highs of 1.24 percent and 38.8 percent, respectively.

A leading official with the bank said the continued improvement in the quality of the bank's loans was behind the extraordinary growth in profits.

The ratio of non-performing loan to its increased loans has been below 1.5 percent each year since 1999.

The bank has cut its outstanding non-performing assets by 159.4billion yuan (19.4 billion US dollars) since 2001, of which the outstanding non-performing loans was reduced by 106.5 billion yuan (12.9 billion US dollars), down an average of four percentage points each year.

The bank reported a 21.3 percent ratio of non-performing loans to total loans by the end of 2003 with its total outstanding non-performing assets down to 69.8 billion yuan (8.5 billion US dollars).

The Bank of China, the second biggest bank in China, also reported fast progress in its efforts to control non-performing assets and restructuring.

The bank said it had cut ties with 1,155 economic entities it set up years ago, and had disposed of 72.4 billion yuan (8.8 billion US dollars) worth of non-performing assets by the end of 2003.

Sources with the bank said the Bank of China recovered 28.9 billion yuan (3.5 billion US dollars) in cash from its domestic non-performing assets and 337 million US dollars from its overseas non-performing assets.

The bank has canceled 35.8 billion yuan (4.3 billion US dollars) worth of bad loans and disposed of 9.6 billion yuan (1.1 billion US dollars) worth of assets used by its debtors to repay loans, a leading bank official said.

The State Council, China's cabinet, has decided to allocate 45 billion US dollars of the nation's foreign exchange reserve to supplement the capital of the bank and the China Construction Bank in a bid to modernize them, with sufficient capital, strict internal controls, safe operations, good services and good economic returns.

The three banks and the Agricultural Bank of China are China's four state-owned commercial banks, accounting for up to 70 percent of the domestic market.

The four banks were forced to take active measures to enhance their competitiveness, focusing on reducing their average non-performing loan (NPL) ratio to less than 15 percent by 2005, or an annual drop of three to five percentage points.

China has an additional 11 joint-stock commercial banks, more than 100 city commercial banks and thousands of rural credit cooperatives.

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