ICBC confident of 10% profit growth

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Last updated at: (Beijing Time) Wednesday, March 31, 2004

ICBC confident of 10% profit growth

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China's biggest commercial bank, ICBC, hopes to see a 10 percent year-on-year hike in operating profits -- from last year's 63.5 billion yuan (7.7 billion US dollars) to 70 billion yuan (8.4 billion dollars) in 2004.

"The target should not be a problem," President Jiang Jianqing said.

Jiang said his bank would not resort solely to interest gaps between deposits and loans to pursue huge profits. Instead, ICBC will work to earn more from intermediate business including creditcards.

His remarks came after a signing ceremony held by ICBC and American Express, a diversified worldwide travel, financial and network services company founded in 1850, who announced their partnership to issue the first credit card in China carrying an American Express logo.

The new card can be used all over China and at millions of American Express merchant locations in more than 200 countries andregions.

Credit card business will hopefully earn ICBC 3.3 billion yuan (397.6 million dollars) this year, according to Jiang.

He predicted all intermediate business including e-banking should bring his bank 10 billion yuan (1.2 billion dollars) in operating profits, up from 7 billion last year.

ICBC has been leading China's "Big Four" state-owned banks which also include Bank of China (BOC), China Construction Bank (CCB) and Agricultural Bank of China (ABC) by assets and customer scale. It now serves approximately 100 million individual customers and 8.1 million enterprises.

ICBC was nonetheless left behind by BOC and CCB, who obtained 22.5 billion US dollars in foreign exchange reserve each from the State Council, China's cabinet, at the end of 2003 as replenished capital that would help them issue initial public offerings.

BOC said it would go public in 2005 while CCB is widely anticipated by industrial insiders to be listed even earlier -- probably later this year. ICBC has announced it will sell shares to private investors in 2006 in tandem with completion of joint-stock reform.

An ICBC spokesman said earlier that listing would be only one step in the bank's reform whose progress, fundamentally, is decided by whether to enhance corporate governance, sharpen competitiveness and learn from excellent international banks in business management.

The "Big Four" banks will have to compete head-on with richer, more sophisticated foreign rivals at the end of 2006, when China grants unrestricted market access to foreign banks under a commitment to the World Trade Organization.

The Chinese banks have piled up a mountain of bad debts due to excessive loans poured into state-owned enterprises over the past decades, sapping their strength, analysts say.

The ICBC spokesman said from 2004 to 2006 the bank will go all out to net 240 billion yuan (28.9 billion dollars) in business profits and either recover or write off 300 billion yuan (36.1 billion dollars) in non-performing assets, which will bring its bad loans ratio to less than 18 percent by the end of 2004, and less than 10 percent by 2006.

The banking giant raked in more than 150 billion yuan (18.1 billion dollars) in profits from the year 2000 to 2003, continuinga four-year growth streak. Its non-performing loan ratio also plummeted 26 percentage points -- from a peak of 47.5 percent at the end of June 1999 to 21.3 percent at the end of last year, he revealed.

Source: Xinhua

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