China Construction Bank Announced Annual Results for 2014 Operating Performance

2014 Financial Highlights:

Ÿ   Total assets amounted to RMB 16,744.13 billion, representing an increase of 8.99% compared with the previous year.

Ÿ   Profit before tax reached RMB 299,086 million, representing a growth of 6.89% compared with the previous year. Net profit increased by 6.10% year-on-year to RMB 228,247 million.

Ÿ   Total loans and advances to customers stood at RMB 9,474.523 billion, growing 10.30% year-on-year. Total customer deposits reached RMB 12,898.675 billion, representing an increase of 5.53% year-on-year.

Ÿ   The annualized return on average assets and annualized return on average equity were 1.42% and 19.74% respectively.

Ÿ   Total capital adequacy ratio (CAR) was 14.87%, non-performing loan ratio was 1.19% and the provision coverage ratio was 222.33%.

Ÿ   Revenue grew by 12.16% year-on-year to RMB 570,470 million. Operating income increased by 8.92% year-on-year to RMB 556,740 million. Net interest income increased by 12.28%, and net interest margin (NIM) was 2.80%.

Ÿ   On account of a strong business performance, the Board recommends a cash dividend for 2014 of RMB 0.301 per share.

 

Beijing, 27 March 2015 – China Construction Bank Corporation (Hong Kong stock code: 939, Shanghai stock code: 601939; CCB or the “Bank”) today announced its operating performance for 2014. As at the end of December 2014, CCB’s total assets reached RMB 16.74 trillion, and recorded a net profit of RMB 228,247 million. The Bank’s return on average assets and return on average equity were 1.42% and 19.74%, respectively. The net interest margin (NIM) was 2.80%, the total capital adequacy ratio (CAR) was 14.87% and the core tier-one capital adequacy ratio was 12.12%. On account of the strong business performance, the Board recommends a cash dividend of RMB 0.301 per share for 2014.

 

As China’s economy enters the phase of the “new normal”, change in development models and the acceleration of structural adjustment have become the “keynote” in the operation of China’s economy. In 2014, amidst complex economic conditions in domestic and overseas markets, and the increasingly fierce competition in the industry and across sectors, CCB operated in line with the requirements placed on the Bank’s capabilities to service the construction of the national economy, to prevent financial risks, and to participate in international competition. The Bank devised a strategy to deepen reform, and accelerate a transformational development in an effort to become a bank with comprehensive services at group level; a bank that offers multifunctional services; that runs with intensive operations, and leads in innovation; and that is a Smart Bank. The Bank was fully committed to building into a banking group with the strongest capabilities to create value, solidifying market position and leading its peers in core indicators.

 

Supported the country’s development strategy and strengthened the adjustment of credit structure

CCB continued to prioritize supporting the country’s development strategy, and actively participated in the implementation of national development strategies including the “Belt and Road” initiative, the building of the Free Trade Zones, the coordinated development of Beijing-Tianjin-Hebei, and the Yangtze River Economic Zone. In 2014, CCB took full advantage of its traditional strengths, and achieved an incremental growth in infrastructure and construction loans of RMB 271,482 million, accounting for 75.25% of loan increments of all corporate loans and supporting areas including projects under construction, national key projects, urbanization and new-rural construction. Meanwhile, the Bank sustained leadership in residential finance, recording RMB 2.25 trillion in balance of residential mortgages, earning the number one spot in both volume and incremental increase among peers and accounting for over 50% of market share in residential-related reform services. The Bank also actively expanded financial services to small and micro businesses, stepped up the promotion of new operation models, improved the level of service for small and micro businesses with tailor-made products that are developed through big data information technology such as “Shan Rong Dai” (rolling facilities) and “Jie Suan Tong” (settlement). The Bank explored new models in rural financial services, continued to increase the number of outlets in township and counties, strengthened cross-sector cooperation with purchasing cooperatives and other relevant rural companies and institutions, and promoted and expanded a plethora of service channels including mobile banking, ATMs and sales terminals. In areas that drew market attention, such as local government financing platforms, the real estate sector and industries with excess capacity, CCB carefully controlled loans granted to industries with excess capacity and those regulated by regulatory policies. As a result, loans to five industries with severe overcapacity, including steel, cement, electrolytic aluminum, flat glass and shipping, shrank by RMB 4.986 billion compared with the beginning of the year, and loans to local government financing platforms decreased by RMB 28,638 million compared with the previous year.

 

Formed a main framework for comprehensive operation and significantly improved multifunctional service capabilities

In 2014, CCB achieved new breakthroughs in building a comprehensive operational platform, and continued to lead the industry in the number of non-bank financial licences. CCB Futures officially began operation, and major progress was made in the pension and policy residential businesses with government approval secured. The financial assets of the Bank’s subsidiaries increased by 34.30% and the net profit increased by 31.63%. Key business indicators for the Bank’s subsidiaries ranked ahead of its peers. Multifunctional service capabilities were significantly enhanced. Through comprehensive servicing, which combined asset management, investment banking and the network of subsidiaries, the Bank solved client financing needs totalling RMB 1.04 trillion. Accumulated credit cards issued surged to over 65 million, sustaining the Bank’s number one position among peers in new card issuance, newly accumulated merchants, and number of consumer transactions. In bonds, the underwriting fee and revenue from bond issuance maintained market leadership for four consecutive years. In investment under custody, business volume increased by 38.06%, and the Bank ranked first among peers in the number and the amount of new-to-market incremental securities investment fund custody products. The Bank also led the industry in the market share of corporate annuity and pension custody products.

 

Stepped up on innovation and scaled new height of internet finance

Following with the development direction of “Intelligent, Ubiquitous and Cross-industry”, CCB launched its internet finance strategy in full measure, and endeavoured to seize the height of internet finance. Firstly, the Bank led the industry in building of three channels including online banking, mobile banking, WeChat banking. As a result, the level of application of CCB’s electronic channels further improved. Electronic banking and self-service channels accounted for 88.03% of total transaction volume, representing an increase of 2.63 percentage points compared with the previous year. Online banking customers reached 182 million, up 19.10%. Mobile banking customers grew to 147 million, up 25.98%. WeChat banking customers surged to 14 million. Secondly, two major platforms devoted to serving the needs of everyday life – “E.ccb.com” and “Joy Life” – achieved strong development. As the first among peers to have launched the e-commerce platform “E.ccb.com”, CCB proactively carried out the platform strategy to promote financing through commerce. Meantime, “Joy Life”, a platform developed to offer convenience and ease of mind to daily lives, has become CCB’s brand in this regard after three years of growth. As at the end of 2014, items of payment made through the “Joy Life” platform totalled over 4,000, covering more than 300 cities, amounting to 230 million transactions and approximately RMB 35 billion in transaction value. Thirdly, the Bank continued to enhance its three pillar product lines in internet finance covering payment, investment and wealth management, and credit financing. In 2014, CCB led the market share among peers in primary payment tenants, such as Alipay and railway tickets (through 12306), and transaction volume recorded RMB 121.6 billion. Further, 70% of wealth management products, 60% of funds, and close to 100% of precious metal accounts were sold through internet channels. The Bank further raced to launch the internet loan business, with a series of products including “e-Loan Platform” and “Express Loan”, which are based on online credit scores and transaction records, and “Fast Loan”, which is fully operated online. Fourthly, the Bank made effective use of intelligent technology applications. By initiating and implementing the top-level design of big data mining, and building corporate data models, the Bank realised the centralised management and governance of data, and provided precise services for all businesses utilising the data asset. Further, the Bank led the market to implement “the cloud of finance” in workplace, and increased agility in business handling. The Bank also deployed intelligent robots for automated customer services, rendering higher volume of automatic response than that of manual telephonic response in the year. As at the end of 2014, volume of intelligent and automated customer service totalled 75.75 million in person.

 

Accelerated overseas network in full measure and achieved rapid development in international business

In 2014, CCB saw fruitful and transformational results in its internationalization efforts. The Bank officially launched four subsidiaries; the Macau branch, the New Zealand subsidiary, the Toronto branch and the Brisbane branch. It secured domestic and overseas regulatory approval to set up entities including those in London, Paris, Amsterdam, Barcelona and Cape Town; completed the acquisition of a 72% total share capital in Brazil’s Banco Industrial & Comercial, and applied for the further establishment of entities in Chile, Zurich and Milan. At present, CCB has 21 tier-one entities in overseas markets, accomplished the initial goal of covering major overseas markets, and established correspondent banking relationship at headquarter level with 1,470 institutions in 138 countries and regions. The Bank also succeeded in issuing RMB bonds in overseas markets in Hong Kong, Frankfurt, Sydney, Switzerland and Taiwan, and received strong market reception. As at the end of 2014, CCB’s total overseas commercial banking assets increased by 32.67%, of which domestic business accounted for RMB 1.46 trillion with a year-on-year growth of 61.94%. In the same year, CCB successfully secured an RMB clearing business licence in London, signifying a step further in the evolution of the Bank’s offshore RMB consolidated clearing system and marked an expanding scope of direct services covering 17 countries and regions across three continents. 

 

Strengthened infrastructure and improved growth momentum

Driven by the strategy of comprehensive transformational development, in 2014 CCB accelerated the consolidation of channels and functions. The Bank built a total of 13,700 comprehensive-service outlets with 17,500 teams for comprehensive service marketing, enabling a gradual transition of the outlet’s functions to emphasize customer marketing, customer experience and product display. The Bank’s customer base continued to strengthen, with an incremental growth of valid corporate clients, corporate RMB settlement accounts, and individual valid customers to 110,000, 680,000 and 11.88 million respectively. The separation of front- and back-office operations for outlet counter services continued, and over 14,500 outlets achieved headquarter centralisation for 30 categories of real-time counter services and products. As a result, operational efficiency increased by 60% and the capacity for product innovation was consistently enhanced. In 2014, CCB produced innovative solutions in areas including urbanisation, environmental protection, cultural industry, township and county finance, small and micro businesses, people’s livelihoods, and consumer finance. Meanwhile, the Bank strengthened the generational upgrade of areas where it maintained traditional advantages, and completed 1,370 product innovations and 223 product migrations. A new generation of the Bank’s core system was further improved, and phase I of 13 applications went online. The Bank completed the transfer of a total of 340,000 corporate cash management customers, 190,000 agents for collection and payment, and 2.52 million corporate e-banking customers. Phase II of the core system made progress in advance, enabling a total of 34 functions in nine projects for customer channels, employee management, corporate cash management and personal mortgages. This led to remarkable improvement in employee and customer experience, and provided strong support to the transformation of operations.

 

Strengthened comprehensive risk management and strictly committed to the risk baseline

In 2014, with great efforts to adjust economic structure, CCB made a strict commitment to the risk baseline, and pushed forward comprehensive risk management at branches and subsidiaries home and abroad, and the implementation of risk control transformed from “unconventional measures” to regular and routine management. The Bank implemented internal risk management appraisal, deepened risk analysis and alert, advocated a culture of compliance, transformed to whole-process management and control with an emphasis on prevention and precaution, and fully enhanced the responsibility system for comprehensive risk prevention and control. Meantime, the Bank highlighted major risk projects and non-performing loan disposal, and realised its goal of asset quality control. As at the end of 2014, the Bank’s non-performing loan ratio was 1.19%, the NPL coverage ratio was 222.33%, and the ratio of allowances for impairment losses to total loans was 2.66%.

 

In credit risk, CCB strengthened the prevention and control of credit risk, adjusted and optimised credit loan policy in a timely manner, consolidated the fundamental management throughout the entire loan process, and improved the capability and level of standards for credit risk management. In liquidity risk, CCB adopted proactive measures according to the fund conditions, and implemented the coordinated management of liquidity at group level. By adjusting the limit to products with major impact on liquidity, such as bond investment, resale products, and deposits and placements with peers, the liquidity of the Bank in 2014 remained within a reasonable range, and regular settlement and clearance was guaranteed. In market risk, CCB improved market risk management policies, identified guidance over risk policies and risk boundaries, established proactive risk management models, and strengthened trade management at group level as well as risk management of financial market businesses at overseas institutions. In operational risk, CCB applied an integrated approach of instruments and measures including the self-appraisal of operation risk, key risk index, and key risk point examination, and effectively conducted risk monitoring of major businesses and key processes. The Bank also strictly implemented law and regulations governing anti-money laundering, reinforced training and awareness education in this field, continuously enhanced the capability to engage in anti-money laundering activities, and effectively prevented and controlled the compliance risk in this aspect.

 

Actively fulfilled corporate social responsibility and significantly increased corporate brand value

In accordance with its mid- to long-term goals for the “Green Bank”, CCB considered the promotion of green loans as the key levers to fulfil its corporate social responsibility. As at the end of 2014, CCB’s balance of green loans amounted to RMB 487.1 billion, realising significant results in emission reduction. CCB continued to support long-term welfare projects including the construction of “CCB Hope Primary School”, “CCB Scholarships and Grants for College Students from Ethnic Minorities Programme” and “Sponsorship Programme for Impoverished Mothers of Heroes and Exemplary Workers in China”, with a total donation of over RMB 700 million. In 2014, forty-five “Mother Health Express” vehicles donated by CCB delivered healthcare services and obstetric care to women in impoverished villages in Xinjiang, Tibet, Inner Mongolia and other provinces. The Bank continued its “Credit Card Points Donation Community Drive” programme, which uniquely explored new means to support charitable activities by encouraging card holders to donate their card points.

 

CCB’s prudent management and undertakings in civil social responsibilities were widely recognised in both domestic and overseas markets. As a result, the Bank received over 100 major awards from renowned institutions, including “The Best Bank in China” in 2014 from the U.S. magazine Global Finance, the “Strongest Bank in China for 2014” and the “Best Large Retail Bank in China for 2015” from the Singaporean magazine The Asian Banker, and was ranked second in the “Top 1000 World Banks” in tier-one capital as complied by the UK magazine The Banker.

 

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About China Construction Bank Corporation

China Construction Bank Corporation, established in October 1954 and headquartered in Beijing, is a large and leading joint-stock commercial bank in China and a well-known brand in overseas markets. The Bank was listed on Hong Kong Stock Exchange in October 2005 (Stock Code 939), and was listed on the Shanghai Stock Exchange in September 2007 (Stock Code 601939). As at the end of 2014, the market capitalization of the Bank reached USD 207.9 billion, ranking fourth among all listed banks in the world. The Bank has an extensive network of 14,856 branch outlets in mainland China, serving 3.48 million corporate customers and 314 million personal customers, and maintains close relationships with leading enterprises in strategic sectors for Chinese economy and numerous high-profile clients. The Bank has established overseas branches in Hong Kong, Macau, Singapore, Frankfurt, Johannesburg, Tokyo, Osaka, Seoul, New York, Ho Chi Minh City, Sydney, Melbourne, Taipei, Luxembourg, Brisbane and Toronto, and owns entities and subsidiaries including China Construction Bank (Asia) Corporation Limited, China Construction Bank International (Holdings) Limited, China Construction Bank (London) Limited, China Construction Bank (Russia) Limited, China Construction Bank (Dubai) Limited, China Construction Bank (Europe) Limited, China Construction Bank (New Zealand) Limited, China Construction Bank Principal Asset Management Co. Ltd, China Construction Bank Financial Leasing Corporation Limited, China Construction Bank Trust Co. Ltd, China Construction Bank Life Insurance Co. Ltd, China Construction Bank Futures Co. Ltd and Sino-German Bausparkasse Co. Ltd.