OREANDA-NEWS. May 30, 2013. In 2013, enterprises with total assets of less than RMB 60 million will become a key service area of Industrial Bank (IB)'s small-sized enterprise business.

The reporter learns from IB (SH.601166) that, in 2013, IB will make adjustment to the customer orientation, business strategy and development objective of its small-sized enterprise business on its own initiative, taking small-sized corporate customers with total assets below RMB 60 million as a key target of financial services. For this purpose, IB will launch a series of supporting measures for system and mechanism reform and invest resources to guarantee, boosting the upgrading of financial services to small- and mini-sized enterprises in an all-round manner.

Some insiders believe that in seeking innovative breakthrough at the layer of corporate finance business actively and making transformation from “priority to SMEs” to “priority to small- and mini-sized enterprises”, IB follows the general trend of economic development, and it is also an important strategic measure of the bank to keep deepening its transformation of business strategy and intensifying its core competitiveness of financial business and achieve sustainable development under the new financial environment and business environment.

Further Sinking the Focus of Services to “Small- and Mini-sized Enterprises”

On April 23, IB published its performance across 2012 and in the first quarter of 2013. According to the report, IB has registered very outstanding performance and kept stable quality of assets, with both scale and benefits creating new record high. Based on sufficient provision and accrual, the net profits of IB hit RMB 34.718 billion in 2012, registering a year-on-year increase of 36.12%. In particular, the net profits reached RMB 10.977 billion in the first quarter of 2013, registering a year-on-year increase of 32.44%, higher than the market expectation.

In the meantime, based on the latest data received by our reporter from relevant department of IB, by the end of March 2013, the number of small-sized corporate customers of IB has totaled 192,900; the balance of its loans to small- and mini-sized enterprises has hit RMB 57.392 billion, up by RMB 7.244 billion over the beginning of this year, registering an annual growth rate of 14.44%. There have been nearly 4,000 customers pooled in the “IB Open Sesame” SME IPO Program, of which 94 have successfully launched their IPOs and 234 introduced private equity. The average loan balance of each pooled customer amounted to nearly RMB 30 million.

According to another group of data provided by IB, by March 31, 2013, IB has extended “Business Express” personal business loans of RMB 170 billion, with a balance of RMB 74.2 billion, lending support to 100,000 business owners, by alleviating their financing difficulties, in various industries: garment wholesale and retail, catering, building material and home decoration, supermarket, general merchandise, small commodities and wholesale of agricultural and sideline products. There has been 335,000 "Business Express” acquiring merchants, to whom IB provides timely and preferential services such as collection, payment, transfer and fees payment.

The good performance of IB showcases that its business transformation has achieved sustained development and its capability in making innovation breakthrough has been reinforced continuously. And it can be deemed as the increasingly deepened business transformation of IB to drive the priority of corporate finance services to focus on small- and mini-sized enterprises downward in 2013.

As indicated by a relevant officer of IB, the number of small-sized corporate customers of IB grew nearly 40% across 2012. On that basis, the bank will further make adjustment to the customer orientation of its small-sized enterprise business in 2013, transforming from “priority to SMEs” to “priority to small- and mini-sized enterprises”. Giving priority to providing financial services to small- and mini-sized corporate customers with assets totaling not more than RMB 60 million, the bank will sink its service focus and orient at “small- and mini-sized enterprises”. Not only is this adjustment a new breakthrough in its own strategy adjustment, but also establishes a new platform for the financial services of IB to small-sized enterprises. It is of great strategic significance for its small-sized enterprise business to achieve healthy and sustainable development.

As learnt by the reporter, based on the “sunken focus” of financial services to small-sized enterprises, IB will launch a range of measures for system and mechanism reform, establish a business system featuring standardized management, plant-based operation and diversified financing gradually, and explore and build a value-added service system meeting the growing demands of small-sized enterprises, so as to form long-term specialized operation capacity. Meanwhile, IB will make steady investment in various resources including business, finance and human resources, so as to effectively support the construction of the specialized development system for small-sized enterprises and guarantee the long-term steady business development.

As indicated by a relevant officer of IB, after the bank upgrades its financial services to small- and mini-sized enterprises in an all-sided manner, the specialized operation system for small-sized enterprises will provide powerful support for financial services to small- and mini-sized corporate customers, who can enjoy more characteristic preferential treatment and support.

“IB Open Sesame” Accompanying the Growth of Enterprises

Among the services of IB targeting at small- and mini-sized enterprises, the “IB Open Sesame” SME IPO Program has won great popularity among small-sized enterprises with its customized considerate services and sustained boost.

Company X is an enterprise possessing the production process and technology of outdoor bamboo recombinant. After the product developed by it passed the European Environmental Evaluation and Certification, the company planned to carry out batch production. Nonetheless, it was hard for it to receive financing support from banks as it didn't have any incomes from its development in the early period and it only held limited assets.

As it has long paid attention to Company X, IB had an in-depth understanding to its industrial prospect and technological strength and had provided equipment-pledged loan in small amount when the company was still in the early start-up period. In order to settle the development problem of Company X, the bank proposed to introduce equity investment and helped it to attract the capital contribution of RMB 15 million from a listed company engaging in forest products in the form of shares. The latter also provided a bamboo forest base of 30,000 mu for Company X to produce raw materials.

With the first successful attraction of investment, Company X realized batch production of outdoor bamboo recombinant, and witnessed considerable profits with 80% of its products being exported to Europe. Then, in order to increase its production and grasp market shares, Company X made preparation for the second attraction of investment. With IB serving as the go-between, the above shareholder company and a PE fund invested RMB 30 million to Company X. Thus, it obtained the capital for workshops and equipment, and in the next year, it witnessed nearly doubled profits, stepping onto the track of fast development.

Company X is one of the pooled enterprises of “IB Open Sesame” SME IPO Program. Relying on this leading product, IB helped the enterprise to get through a crucial development stage by integrating resources in an effective way based on the specific situation and needs of Company X in its growth period.

It is reported that the “Open Sesame – SME IPO Program” released by IB in June 2010 includes “two categories”, “three phases” and “nine schemes”. Namely, centering on the IPO of SMEs, the program integrates the two kinds of financial service tools – conventional banking and investment banking, to provide customized financial service schemes for SMEs at different stages of their growth, namely initialization, growth and maturity, across many financing fields including direct financing, indirect financing, and cash management, etc. Such schemes are based on the different needs of SMEs at different growth stages, covering capital attraction, growth navigation, marketing consultation, merger and acquisition, IPO both at home and abroad, and SME private equity debt.

In addition, in the aspect of product innovation, IB has established a category-based multi-level product system, exerting itself to improve its market competitiveness of financing products for small-sized enterprises, the convenience of payment and settlement products, and the actual efficiency of value-added services in the hope of brining more specialized and efficient financials services to small-sized customers.

“Business Express” Highly Favored by Merchants

Recently, Boss Wang, an individual business owner dealing in water-heating equipment, didn't worry about working capital any more.

The story goes as follows. As a supplier of a leading chained building material supermarket, Boss Wang made settlement with the supermarket every three months. Working capital should be prepared separately for making routine purchase and paying salaries. With honest operation and steady development, he could get loans from banks smoothly for years, but he failed to find a satisfactory solution in terms of repayment method. Either equal repayment on a monthly basis or principal repayment in a lump sum upon maturity couldn't match his capital recovery period. When settlement of the supermarket was not due and his reserved funds were just used for stocking, Boss Wang would face the shortage of working capital. He often needed to borrow “bridge loan” from fellow townsmen for repayment. Although the borrowing period was not long, a considerable amount of interest should be paid. Boss Wang felt very sorry about such expense that should not be spent.

In recent days, in the “Business Circle Tour” launched by Industrial Bank (IB) targeting at the building material supermarket, Boss Wang learnt that the “Business Express” integrated financial service solution that the bank provided to small- and mini-sized enterprises had innovation in the method for repaying personal business loans, increasing the repayment method of “principal repayment in installments”.

The so-called “principal repayment in installments” means that the loan and interests can be repaid simultaneously or in a staggered manner within the loan term, namely the loan principal can be repaid on a month, quarter, half-year or year basis while the interests may be repaid monthly; or only interests are repaid in the first stage, and both principal and interests are repaid in line with the agreed method in the second stage. Such flexible repayment method can significantly alleviate the repayment pressure of merchants like Boss Wang whose sales payment is recovered periodically or who have obvious high and low sales seasons.

Considering the actual situation of Boss Wang, IB designed a repayment method of “paying interests monthly and principal quarterly”. As the interval of principal repayment is consistent to the period for settling the sales payment with the supermarket, Boss Wang does not have to bother with borrowing for temporary use any more.

In fact, flexible repayment method is only one of the aspects that the “Business Express” integrated financial service solution is superior to similar products. It is said that “Business Express” is an integrated financial service program customized for the group of “growing business owners” including self-employed personnel, individual industrial or commercial business owners, partners and owners of private enterprises. Integrating loan financing, payment and settlement, financial planning, VIP service, installment of credit card bill and exclusive card, the program boosts the business growth of business owners, who can thus increase their wealth and enhance their life quality at the same time.

In order to improve the financing convenience of business owners, IB will release the product of “Business Express – Simple Loan” in the near future to further simplify the procedure for loan application. With a credit line up to RMB 3 million and a loan term down to seven days, the product can sufficiently meet the temporary need of customers for working capital. Meanwhile, the loan features flexible payment and repayment methods. After setting the frequently-used current accounts in advance, customers may grant money to the designated accounts via self-service channels such as internet banking and mobile banking, or choose payment on their own, thus saving the trouble of going to the banking outlets frequently. Moreover, the loan interest is calculated on a daily basis, which saves the financial cost significantly.