CCB Comes out in the front on the Top 1000 World Banks List
On the list of Top 1000 World Banks 2005 published by the latest July issue of Britain-based financial journal The Banker, China Construction Bank (CCB), with a net asset of US$35.647 billion, was rated the 11th, which is the best ranking of mainland Chinese banks on the list.
As a leading international financial journal affiliated to the British Financial Times Business Ltd., The Banker has long been assessing and analyzing the competitiveness of the global banking industry from the perspective of third party. Its Top 1000 World Banks list is seen as the measurement of the strength of world banks and mirrors the competitiveness of 1000 banks around the globe.
The list, made referring to the Tier 1 capital of 1000 world banks by the end of 2005, contains 25 Chinese banks of which the leading ones are CCB, Industrial and Commercial Bank of
Capital is the foundation of a bank’s strength. Following its initial public offering (IPO), CCB’s capital has risen considerably and leads other Chinese banks. According to the 2005 business performance statistics released by the bank, by the end of 2005 its Tier 1 capital stood at RMB287.677 billion, rising by 47.1% over 2004 and capital adequacy grew by 2.28 percentage points to 13.57%. Such numbers are also among the best even in the global emerging markets, which is mainly attributed to the RMB72.6 billion of capital raised by its IPO and the improvement of its profitability and control ability over risk assets.
In addition to the Tier 1 capital, CCB’s return on assets and total equity to total assets ratio are the best among Chinese banks and its capital adequacy and bad debt ratio also outperform those of the other three state-owned commercial banks. After its IPO CCB’s profitability has maintained stable growth. By the end of 2005, its revenue has increased by 12.9% to RMB128.714 billion, pre-tax profits grew by 8.1% to RMB55.364 billion, and net fees and commission income risen by 30.7% to RMB8.455 billion. Its various business indexes get improved continuously, with the average return on assets reaching 1.11%, return on average equity 21.59% and cost/income ratio 45.13%, which are all among the best in the Chinese banking sector and fully recognized by the international investors. CCB have a net return on assets and net return on equity of 1.11% and 21.59% respectively, clearly outrunning those of the other three state-owned commercials banks and approaching the average level of European and American banks. Among the four state-owned commercial banks, CCB has the best asset quality, with the NPL ratio dropping by 0.08 percentage point to 3.84% over 2004.
The drive behind such achievements is the effective reform and innovation of CCB. The bank is committed to improving its corporate governance structure and pushing ahead management reform and strategic transition. Following the IPO its corporate governance structure has been improved continuously, the rights and responsibilities of the shareholders’ meeting, board of directors, board of supervisors and the senior management clearly defined, a sophisticated decision making, execution and supervision mechanism set up and the check-of-balance established among different stakeholders.
After making in-depth analysis of the financial situation and the prospects of the banking industry home and abroad, CCB has updated its business strategies and raised the strategic vision, i.e. building CCB into a leading international commercial bank offering customers the best services, creating the maximum value for its shareholders and providing its employees with the best career opportunities”. To that end, its major business units and 38 provincial branches have formulated and implemented their three-year business strategies respectively. Following the “customer-centric” business philosophy, CCB has long been committed to optimizing business process, improving management system, accelerating product innovation and strengthening marketing efforts and customer services.
Effective control of risks is the pretext of sound business growth. CCB has always been the leader in risk control compared with other Chinese banks. It is the first Chinese bank adopting the independent credit auditor system, implementing the economic capital budget and economic value added management method and setting up the risk and return mechanism with economic capital as the core to reaching a balance between risks and return. Today, the bank is implementing the vertical risk management model under which the risk managers and customer managers work in parallel and the risk directors directly report to the headquarters. Not long ago CCB formally appointed its first Chief Risk Officer and all the risk directors of its provincial branches appointed and trained by the headquarters have taken office. It will strive to initially build the risk management system as required by the New Basel Capital Accord in about three years and bring its risk management system in line with the New Basel Capital Accord in five years, especially developing a set of economic capital management system covering various risks such as credit, market and operational risks and bringing its credit risk measurement up to the standards of the Internal Rating-Based Approach.
The sound performance of CCB after its IPO is widely recognized by investors as well as all sectors of the society. In 2005, the bank was credited as the Best Chinese Bank and received the Retail Banking Payment Innovation Award and the Retail Banking Cross-channel Experience and Product Award from The Banker, rated as the Best Chinese Bank by The Asset and won the Best Financial Risk Management Award in
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