ICBC says profits up on increase in services
By Zhang Dingmin (China Daily)
Updated: 2005-11-18 06:40

The Industrial and Commercial Bank of China (ICBC) Limited reported an improved performance for the first three quarters of this year yesterday, strengthening itself ahead of a planned public share offer scheduled for next year.

Shortly after it was restructured into a joint-stock bank last month, China's largest State-owned lender also said new management mechanisms, including a new performance evaluation system, have been put in place.

Operational profit rose by 10.8 per cent on a year-on-year basis to 64.4 billion yuan (US$7.9 billion) in the first nine months of this year as its intermediary business, which the bank is striving to grow to reduce reliance on interest based income, grew rapidly.

Income from intermediary services increased by 23 per cent from a year earlier to 10.4 billion yuan (US$1.2 billion) in the first 10 months of this year, accounting for nearly 10 per cent of net business income.

Local currency management contributed another 41.7 billion yuan (US$5.1 billion), which accounted for 26.6 per cent of total income.

"The intermediary business continued to grow rapidly to become one of the major sources of profit," said an ICBC spokesman.

The ratio of non-performing loans stood at 4.75 per cent at the end of October, while the capital adequacy ratio, measured by capital divided by risk-weighted assets, rose by 0.11 of a percentage point from the end of June.

China launched a major reform of its "Big Four" State-owned lenders at the end of 2003, when it injected a combined US$45 billion of capital into Bank of China and China Construction Bank.

The latter was listed in Hong Kong earlier this month, raising US$8 billion.

The ICBC's reform plan was approved in April, when the bank received US$15 billion in capital from the Central SAFE Investment Ltd, China's State bank holding company, and the finance ministry, previously the sole investor, retained an equivalent amount of equity investment in the bank, using the remainder to write off some of its non-performing loans.

In preparing for the share offering, the bank plans to sell stakes to strategic foreign investors.

It said earlier that investors including Goldman Sachs Group Inc, American Express Co and Allianz AG planned to buy a combined 10 per cent stake for more than US$3 billion.

(China Daily 11/18/2005 page11)