Preliminary statistics showed that all ICBC domestic and overseas branches achieved a total of RMB 90.2 billion operating profit in 2005, RMB15.5 billion higher than that of the last year. Amongst, book profit was RMB 28 billion, an increase of 7.5 times compared to last year. By the end of 2005, ratios of non-performing assets and loans for all ICBC domestic and overseas branches together were 2.
49% and 4.43% respectively. Non-performing asset balance and ratio have both declined continuously. The capital adequacy ratio was 10.26%, of which, the core capital adequacy ratio reached 9.23%. The provision coverage rate maintained at 100% based on accrual calculation. It is introduced that the international accounting firm employed by ICBC is now performing full audit on all these ICBC indexes.
In 2005, ICBC completed the reform from a state- owned commercial bank to a shareholding commercial bank after the establishment of Industrial and Commercial Bank of China Limited. This was not only just a change of the name. It marked all the efforts that ICBC has put over the past several years. Numbers can be the most convincing proofs to indicate ICBC performance. During the Tenth "Five-Year" period, ICBC operations have undergone phenomenal changes. In terms of operation profitability, ICBC operating profit was RMB 10 billion in 2000 but 9 times of this figure in 2005. In terms of asset quality, ICBC moved away "Three Big Mountains". ICBC non-performing loan rate was 34.44% at the end of 2000 but fell to 4.43% till the end of 2005, with a decline of 30 percentage points. Further, ICBC disposed over RMB 180 billion of non-credit assets and transformed the potential risk of nearly RMB 1 trillion "Evergreen" loans, which indicates that a new loan was issued to cover the old one to maintain cash turnover. In terms of income structure, ICBC interest spread income from loans and deposits accounted for nearly 70% of net operating income in 2000., This figure was down to 53% in 2005, and the remaining 47% income came from transactions , investment services and intermediary business. The income structure was clearly optimized. And the asset structure was more rational. The credit assets accounted for almost 70% of ICBC total assets in 2000 but down to around 51% at the end of 2005. In terms of loan, ICBC personal loan balance was over 16% of all loan balances as at the end of 2005, yet this figure was only 5% in 2000. (All the above figures are according to the internal statistics, but have not been audited yet.)
The most heartening thing was that ICBC competitive edge was significantly sharpened in the past five years. It can be seen from the strong profitability and optimized structure mentioned above, and is also shown from enhanced operating efficiency and improved innovation capacity of ICBC. ICBC cost-income ratio fell from 63.59% in 2000 to 38.49% in 2005. Over the past five years, the average valid asset per person increased from RMB 6.68 million to RMB 17.05 million; the average deposit per person moved up from RMB 6.90 million to RMB 15.28 million; the average loan per person increased from RMB 5.12 million to 8.66 million; the average net operating income per person was up from RMB 167,700 to RMB 390,000; the average operating income per person increased from RMB 21,200 to RMB 245,500. The Annual growth rate is around 20.62%, 17.25%, 11.07%, 18.4% and 63.16% respectively during the past five years. Meanwhile, by following modern commercial banking practices and taking the advanced information technology as basis, ICBC headed for innovation in both management and services. ICBC was the first among domestic counterparts to centralize all data across the bank and set up a processing platform to carry all business services. Every loan was centralized controlled and monitored real time during the whole process. A reform pilot was conducted in managing ICBC branches flatly. ICBC was one of the earliest banks to establish special organizations for processing bills and bankcards. ICBC also occupied and maintained a leading market position in such new business services as E-banking, Finance, Bank cards, Asset Custody and Bills.
It is clearly showed that ICBC further strengthened its advantages in traditional banking business while carrying out structural adjustments and innovative reforms. Deposits, loans and settlement businesses have all attained good results. All types of ICBC RMB deposits have increased by RMB 575.5 billion in 2005, RMB 127.9 billion higher than that of the last year, indicating a high liquidity. The direction and amount of lending was appropriate and reasonable. A cumulative total of RMB 3.5 trillion of all kinds of loans in RMB and foreign currency were released in the whole year, of which, newly increased loans were RMB 211.9 billion. While keeping release credit to main construction projects in infrastructure sectors and bottleneck industries, ICBC gave companies more loans to meet their fund needs on working capital. Accumulated short-term loans of RMB 1.28 trillion were released in the whole year. More loans were released to meet the demand of small enterprises and personal consumption needs that satisfy the requirements, which were cumulative RMB 186 billion and RMB 203.7 billion respectively. In 2005, amount of corporate RMB settlement of ICBC reached RMB 185 trillion.
Market analysts and industry professionals believed that thorough preparation, standardized and stable steps and methods made ICBC shareholding reform run smoothly. Since the financial reorganization, ICBC has declared that the bank had always took corporate governance and operation model and growth mode transformation as the main focus of the reform, which is an objective that will not be changed even from now on.
It is introduced that most of the 17 tasks laid down by ICBC at the early stage of restructuring were now completed. Currently, ICBC Three "Boards" and Senior Management Team have started in full operation according to Company Regulations and respective Rules. New method of evaluation on operating performance was implemented.
Performance value management system has been put in practice by products, departments and branches. Conversion of old and new financial accounting scheme has been completed. Capital management and comprehensive risk provision system framework have been established. The internal evaluation project has made new progress.
Classified 12-Grade management of loan assets was fully implemented. The independent internal audit scheme, which directly reports to Board of Directors and the internal control compliance management scheme, which covers the whole area and business flow were also started in full operation.
Currently, ICBC is pushing shareholding restructuring further, and will intensify the reform in operation management system. Business flows are developed for serving customers better. Functions at the front, middle and back stages are further separated. Organizations set-up are adjusted to move towards flat management. Performance appraisal and expense allocation system are based on economic value increase. Incentive and constraint mechanism are enhanced. Attention will be given to introduce strategic foreign investors, and to create opportunities to list in public.
