China Construction Bank Corporation (“CCB” or “the Bank”; Shanghai stock code: 601939, Hong Kong stock code: 939) announced its operating performance for the year 2012. The Bank made significant achievements in its various business segments in 2012 by operating under the theme of “seeking progress while maintaining stability”, which included steps to pursue development and innovation, restructuring, serving the real economy and by stepping up its strategic transformation.
CCB realised a net profit of RMB193.602 billion for the whole year or a growth of 14.26% compared to last year. As a result, the Bank intends to distribute to its shareholders a final dividend of RMB0.268 per share (including tax). As of the end of 2012, CCB’s non-performance loan ratio was 0.99%, down 0.10 percentage points from 2011 year end; its allowances to non-performing loans also rose 29.85 percentage points to 271.29%. (Unless otherwise stated, the data herein are calculated in accordance with International Financial Reporting Standards on a consolidated basis.)
Business performance remains sound while
core performance indicators rank top in industry
CCB’s 2012 annual report indicated that, notwithstanding all the complicated situations and challenges, the Bank was able to achieve steady growth in various key financial indicators, thanks to its prudent and pragmatic operating style, its attention to forging a solid foundation as well as improvements in its sustainable development capability. As of 2012 year end, the Bank’s total assets were up 13.77% from the previous year to RMB13.97 trillion. Total loans and advances to customers were RMB7.51 trillion, growing 15.64% from last year; deposits from customers grew 13.57% from last year to RMB11.34 trillion. The Bank’s loan-to-deposit ratio was maintained at 66.23%.
In the year, CCB’s net interest income grew 15.97% to RMB353.202 billion, while its net interest margin moved up 5 basis points to 2.75%. Its return on average assets and return on average equity were respectively 1.47% and 21.98%. The Bank’s capital adequacy ratio and core capital adequacy ratio were up respectively by 0.64 and 0.35 percentage points from the previous year to 14.32% and 11.32%.
Enhanced credit management capability and improved credit asset structure
By carrying out sustained in-depth adjustments in its credit structure, CCB was able to consolidate its position in areas of traditional dominance. As of the end of 2012, the balance of its loans to the infrastructure sector was RMB2.10 trillion and the amount of new loans to this sector accounted for 27.04% of all new corporate loans. In residential mortgage loans, with a balance of RMB1.53 trillion, the Bank topped the banking industry in terms of both balance and new loan amounts. The balance of the Bank’s and micro enterprise loans was RMB745.453 billion, an increase of 17.97%. For agriculture-related loans, the balance was up 21.43% to RMB1.27 trillion. Growth in indemnificatory housing development loans was 129.62%.
CCB’s extension of credit to the“6+1” industries with overcapacity, including steel, cement, coal chemical industries, plate glass, wind power equipment, polysilicon and shipbuilding, was under stringent controls. In 2012, the balance of loans to these industries showed a reduction of RMB1.2 billion from the end of the previous year. Loans to local government financing vehicles were also under effective controls, with the balance of such loans placed under supervision reduced by RMB18.295 billion from the end of the previous year, while the share of loans with full cash flow coverage came to 93.90%.
In order to curb investment and speculation for real estate development, CCB’s new loans were directed primarily towards supporting either prime real estate customers with high credit ratings, good operational efficiency and sound closed management or ordinary commercial housing projects. As of the end of December 2012, the balance of these loans totalled RMB415.77 billion, a reduction of RMB3.39 billion from a year earlier. Meanwhile, the share of balance of loans to industries meant for prudent support and that of loans to industries meant for gradual reduction were reduced respectively by 0.89 percentage points and 0.26 percentage points.
Through stringent risk controls and effective risk disposal, CCB was able to maintain stability in its asset quality. As of 2012 year end, the Bank’s non-performing loan ratio was 0.99% or a drop of 0.10 percentage point from 2011 year end; the balance of non-performing loans saw an increase of RMB3.703 billion from the previous year to RMB74.618 billion; its allowances to non-performing loans also rose 29.85 percentage points from the previous year to 271.29%.
Fee-based businesses under normative development
The annual report revealed that, as of 2012 year end, CCB registered net fee and commission income of RMB93.507 billion, or an increase of 7.49% on the year. Though income growth in some fee-based businesses slowed down due to regulatory and market factors, the rapid growth in the Bank’s credit card business, financial advisory business and wealth management business were instrumental in driving income growth from the fee-based businesses as a whole.
For CCB’s credit card business, the number of credit cards on book increased by 8.07 million cards to 40.32 million cards; spending transactions totalled RMB851.761 billion and the balance of loans was RMB177.936 billion. The Bank was the first among its peers to offer exclusive Internet banking to its private banking customers and the financial assets of these customers grew 30.19% during the reporting period.
The Bank’s cross-border Renminbi business also witnessed rapid development. In 2012, the amount of cross-border Renminbi settlements handled domestically was up 85.71% to RMB586.234 billion. The scale of the Bank’s investment custody business grew 31.07% to RMB2.70 trillion; the number of operational personal pension accounts grew 25.49% to 2.56 million; the amount of assets under custody in operation increased 48.13% to RMB24.552 billion. At the same time, CCB topped the market in underwriting amounts for short-term financing bills, medium-term notes as well as private placement bonds. Its income from new financial advisory services hit RMB6.680 billion.
Banking infrastructure reinforced while
capability for sustainable development strengthened
With the layout of its banking network getting increasingly sophisticated, CCB’s customer base was further consolidated. At 2012 year end, the Bank had a total of 14,121 domestic banking institutions or an increase of 540 from a year earlier. The number of self-service equipment for customers soared by 11,323 sets, representing the highest increase in the industry. The total number of private banks and wealth management centres was 311 and the number of personal loan centres and business banking centres totalled 1,200 and 244 respectively.
In 2012, the Bank’s e-banking customers and usage of e-banking channels grew at an accelerated pace. The number of personal online banking customers grew 41.07%; the number of corporate online banking customers grew 54.10%; the ratio of the number of transactions through electronic banking to that through the front desk reached 270.30%. There was also steady expansion in customer account groups. The number of institutional accounts was up 20.15%; the number of asset possessing personal accounts was up 8.92% and specifically, the number of private banking customers grew 18.82%.
At the same time, with the Bank advancing in earnest the implementation of administrative measures for capital, its capital base was further consolidated. In 2012, the Bank actively carried out studies on innovative capital tools and succeeded in completing the issuing of RMB40 billion in subordinated bonds. CCB also used the implementation of new capital administrative measures as an opening to speed up its transformation towards capital intensification, thereby raising its capital utilisation efficiency.
Integrated operating structure takes shape as overseas business develops rapidly
With eight operating subsidiaries and 26 rural banks at home and abroad, CCB’s business now spans funds, financial leasing, trusts, insurance and investment banking. With the types of licences under its name having an appreciable advantage over its peers, an integrated operating platform has already been built. At 2012 year end, its subsidiaries had total assets of RMB260.839 billion and realised a net profit of RMB2.139 billion.
CCB’s overseas business development strategy has focused on serving Chinese enterprises going global as well as accelerating localization. Future development will rely equally on organic growth and mergers and acquisitions. In 2012, the total assets of all overseas branches and subsidiaries amounted to over US$80 billion. CCB London succeeded in issuing RMB1 billion off-shore Renminbi bonds, the first of its kind in London. CCB Melbourne branch already opened for business. Meanwhile, preparation work on its Dubai and Russian subsidiaries and on its branches in Toronto, Taipei, San Francisco, Osaka and Luxembourg continues to proceed at an accelerated pace.
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