OREANDA-NEWS. September 07, 2012. Industrial Bank (IB) released its semi-annual report of 2012. As revealed in the report, in the first half of 2012, Industrial Bank (IB) unswervingly pushed forward its business transformation, reform innovation and management improvement against the macro-economic situation which was complicated and changeable and the horizontal competition which was becoming increasingly furious, reported the press-centre of IB. 

The bank kept its stable and healthy development of all businesses, improved its professional operation competence and internal growth power steadily, making desired business achievements. Specifically, after the sufficient provision and accrual, the net profits of IB hit RMB 17.102 billion in the first half year, increasing nearly 40% YoY; the non-performing loan ratio remained at 0.40%, the same as that at the end of the first quarter, reaching the best level of listed banks. According to the closing price (RMB 12.48 per share) on July 31, the P/B ratio and P/E ratio were 1.04 and 3.92 respectively, with obvious evaluation advantages.

More sturdy business growth and improved internal capital growth power. The total assets of IB reached RMB 2,780.451 billion, increasing by 15.43% over the beginning of this year. The balance of all deposits in both home and foreign currencies reached RMB 1,499.742 billion, up by 11.48% over the beginning of this year, and the proportion of increased deposits witnessed significant growth. The balance of various loans both in home and foreign currencies surpassed RMB 1 trillion for the first time, reaching RMB 1,058.007 billion, up by 7.60% over the beginning of this year. The net assets belonging to the shareholders of the parent company reached RMB 129.722 billion, up by 12.60% over the beginning of this year; the net capital hit RMB 168.862 billion, up by 13.55%; and the capital sufficiency reached 11.25%, up by 0.21% without the supplementation of external source based capital. The capability internal capital growth power of IB became increasingly noticeable.

Flexible and accurate assets allocation contributed to the financial performance outperforming anticipation. The company made an accurate research and judgment over the falling tendency of market interest rate and made forehanded arrangement to increase the allocation of non-credit assets with high return and intensify loan pricing control, thus continuing its fast YoY growth of economic benefits on the basis of stable scale growth. In the first half year, the operating income realized accumulatively hit RMB 41.221 billion, up by 57.06% YoY; the cost/income ratio was 24.96% , down by 4.44% YoY, remaining at a low level among all similar banks. Under the circumstance of sufficient provision and accrual, the second quarter witnessed a new record high for quarterly profits. The after-tax profits realized by the bank in the first half year hit RMB 17.102 billion, up by 39.81% YoY. The growth of profits was significantly higher than the growth of assets in the same period. The weighted mean ROE reached 13.81%, increasing 1.26% YoY and remaining a leading position in the industry. The return on total assets reached 0.66%, up by 0.04% YoY.

The management system and mechanism was gradually improved in adaptation to the trend of market-oriented interest rates. Facing the deepened market-oriented reform of finance, the company made adjustment in the management mechanism and business layout in advance. By implementing FTP (funds transfer pricing) in an all-sided way inside the bank, IB took the lead to establish a market-oriented capital operation department among all similar banks and improved the reform of treasury management, setting up a management mechanism for interest rate pricing, which are characterized by the combination of centralization and decentralization as well as reasonable authorization, with FTP as the basis and the assessment of profits of business lines and business offices as the precondition. Based on the structural adjustment for years, the proportions of credit assets and common deposits priced according to the legal interest rates in the total assets and total liabilities of the company kept on dropping year by year. By the end of this first half year, they were 38.05% and 56.60% respectively, remaining at the lowest levels among similar banks. In other words, the proportions of total assets and total liabilities under the market-oriented pricing are obviously higher than those of other banks.

The operational transformation was pushed ahead steadily, with business and income structures witnessing further improvement. Pushing forward the transformation of business model and profiting model in an in-depth and sustained manner, IB vigorously developed such businesses as investment banking, financing product, assets trust, financial leasing, and trust following the directions of emerging businesses including wealth management, investment banking, and assets management, etc., so as to alleviate the dependency on conventional interest incomes and increase the proportion of intermediate business incomes. In the first half year, the accumulative incomes of handling charges and commissions reached RMB 6.552 billion, up by 61.86% YoY. Specifically, The incomes from the businesses relating to payment and settlement, custody, leasing, and trust, which reflect the improvement of service capabilities and emerging businesses, all kept growing at a high rate, up by 84.83%, 330.72%, 174.47% and 334.02% YoY respectively.

The prevention and control of major risks were intensified to keep assets quality stable. Confronted with the pressure of a depressing economy, the company continued strictly controlling the admission standard for customers. While tightly controlling the admittance of projects, it kept strengthening risk control over major industries, furthering the restructuring of credit assets, and improving the refined level of risk management. In the second quarter, it effectively inhibited the growing momentum of non-performing loans and special-mentioned loans, keeping its asset quality basically stable. By the end of this first half year, the balance of non-performing loans was RMB 4.212 billion, and the non-performing loan ratio was 0.40%, the same as that in the first quarter. The balance of special-mentioned loans went down a bit compared with the first quarter. With sufficient provision and accrual to the loans, the provision coverage reached 455.95%, up by 70.65% compared with the beginning of this year, remaining at a high level among peers.

The reform of business line specialization was launched in an all-round manner and the professional operation competence was improved continuously. Based on the further deepening of reform in the retailing business lines, the retailing organizational structure of the Head Office and branches of IB, especially the organizational structure for debt marketing management, was further improved, and the management mechanisms for businesses, teams, and resources distribution were further consummated. In this way, the responsibilities to carry out planned management as a whole and classified guidance for branches were gradually implemented and intensified gradually. The reform of corporate finance lines was pushed forward in an orderly manner, the organizational structures for corporate finance headquarters, business headquarters, and business departments in the Head Office and branches of IB were basically established, and the specialized mechanisms for marketing planning, policy conduction, and business operation were formed step by step. A fair development mechanism was obviously intensified, and a “three-in-one” marketing organization system was established preliminarily. The reform of the financial market lines was launched smoothly, and the financial market headquarters of the Head Office of IB was officially established and put into operation. The reform of financial market departments in branches was driven forward steadily, and hence, the specialized operation pattern of business lines was further formed.

The businesses at all lines kept developing in a desired manner and the integrated operation was pushed forward stably. In the aspect of corporate finance businesses, the investment banking business kept growing at a high rate, and the accumulative financing scale approached twice as great as the scale of newly-increased corporate credit. The bank ranked No.6 in the market in terms of gross underwriting and issuing volume of debt financing tools, and No.1 in the market in terms of the number of enterprises for which IB served as the leading underwriter and issuer.

Meanwhile, IB has effectively grasped the opportunities for direct financing businesses during the process of financial disintermediation. In terms of cash management business, the daily mean deposits of IB broke through RMB 150 billion, and its green finance business continued keeping a leading position, with the financing balance approaching RMB 100 billion. In the aspect of retailing, the balance of personal deposits hit RMB 250 billion, and the bank achieved the balance of deposits and loans basically for the first time. The service levels of retailing wealth management, “Business Express” acquiring business, credit card and private banking business witnessed steady growth. In the aspect of financial market businesses, the scale of institutional asset liability increased significantly, which made more significant contribution to the business development and profit growth of the whole bank. Such businesses as bank-bank platform, assets custody, and agency precious metal trading kept growing at a fast rate, and their brand reputation and market influence witnessed further expansion. The subsidiaries controlled by IB saw healthy business growth, and they were in active linkage with the banking businesses. In the first half year, the profits of China Industrial International Trust Limited and Industrial Financial Leasing Co., Ltd. hit RMB 338 million and 307 million respectively, increasing by 196% and 564% YoY respectively.

In the coming second half year, IB will further extend its vision based on a number of financial markets, adhere to the strategy of differentiated businesses, and study and consider the strategies for business layout and asset liability allocation. To extend the non-credit asset businesses in a number of markets by improving the credit structure, to extend the debt sources in different channels, and to improve the refined operation management, the bank will better meet the financial service demands of customers and serve the development of the real economy.