OREANDA-NEWS. March 31, 2011. Beginning from 2010, ICBC has taken trade finance as a strategic highlight to adjust its credit structure and moved aggressively on trade finance to replace the conventional liquidity loans. Growth of trade finance business has been impressive since then. ICBC held the top spot in domestic ranking by having over RMB 500 billion of in-balance sheet trade finance balance up to end of February this year, reported the press-centre of ICBC.

At present, 32.43% of all ICBC's liquidity loan balance is in-balance sheet trade finance balance, up 7.82 percentage points from the beginning of 2010 and an indication of further improvement in its loan structure. With a bad loan rate of 0.32% by end of February, ICBC maintains good risk control in line with the fast growth of the in-balance sheet trade finance business, which is another major profit growth point for the Bank.

To the domestic enterprises, there have been a lot of changes in advancing a business for the past few years. In light of the thriving trade activities and complex inter-relation between transactions, logistics and funds, customers desperately need trade finance services to meet the complex funding shortfall during a trade. In this respect, ICBC steps up its innovation efforts on trade finance products and services, improves service standard and looks for any business opportunity. This has boosted the service capabilities of ICBC in this business area.

ICBC's current offering in trade finance is a collection of three large categories of portfolio products of account receivables, payables and advance payments, commodity (pledge of goods) at the heart, together with tailored solutions, covering all the transaction steps, different settlement options and commercial models of the customers. Moreover, for those customers who are eligible to apply for trade facility, ICBC enforces authorization and approval rules different from the rules applied for approving general loans, ensuring good service efficiency under effective risk control. Especially to all the small enterprises, trade facility help address the issues of small company scale, few collateral/pledge, poor risk-resistance capability by relying on the debt and transaction with the key companies, a solution to obtain financing "in a short time, in a frequent and quick fashion". Small business customers warmly welcome the services. 2010 data shows that ICBC has provided trade facility to small business owners totaling RMB 202.532 billion, a jump of 106.55% when compared to same period last year.

Trade finance business is beneficial to the customers, as well as significant implications to ICBC in many ways: adjustment of credit structure, improvement in risk control and earning more capital income. Trade facility matches with the transactions, short term, fast turnover, which facilitates liquidity management on the loan capital in a bank and stops the funds from being embezzled. Trade facility covers the whole trading and supply chain and evolves into one main option for production and logistics companies to obtain loans. When compared to conventional project loans to large customers which are relatively centralized, trade facility can effectively mitigate the concentration risk because of the wide distribution of customers. Besides, the high liquidity of trade facility enables a bank to achieve maximum income through the management on loan's liquidity under limited loan capital, and expand the customer base by offering financial services all the way from trade finance customers, key companies in the supply chain, to their counterparties, customers in the upstream and downstream.

This year, ICBC will push further the healthy growth of trade finance business, said an executive with ICBC. By expanding the supply chain finance business, ICBC is moving towards a service model of cross-regional supply chain finance, stepping up the efforts on product portfolio innovation and service efficiency. The ultimate goal is to turn trade finance business into an important product for ICBC to adjust its credit structure and serve the loan market for small-and-medium enterprises.