Business Development Off to a Good Start,
Providing Firm Foundation for Steady Operations for the Whole Year
China Construction Bank Corporation (”CCB”) announced its 2009 first quarter results on April 24th 2009. In the first quarter of 2009, CCB had implemented the State’s macro-economic policies in turning the “crisis” into an “opportunity” and in responding to challenges proactively. The development of its business was off to a good start with operating efficiency growing steadily, asset quality improving continuously. Both amount and ratio of non-performing loan maintained a “dual drop”. Subsequently, it was able to achieve a new success in supporting the steady and brisk growth of the country’s economy and in maintaining stable and healthy development of its own business, providing a firm foundation for steady operations for the whole year.
Sustained balance sheet growth; profit before provision essentially steady. As at March 31st 2009, CCB’s total assets were RMB8,674.63 billion (unless otherwise stated, the Group’s data set forth herein are reckoned in RMB and calculated in accordance with the International Financial Reporting Standards), an increase of RMB1,119.18 billion or a growth of 14.8% from the end of last year; its total liabilities were RMB8,180.45 billion, an increase of RMB1,092.56 billion or a growth of 15.4% from the end of last year. Deposits from customers reached RMB7,214.36 billion, which was an increase of RMB838.44 billion or 13.2% from the end of the previous year. Thus adequate liquidity is maintained.
Operating income and profit before provision and tax were respectively RMB65.65 billion and RMB42.97 billion, which maintained a steady level as compared to the same period last year. Net fee and commission income rose 10.4% year-on-year to RMB11.84 billion. Since the benchmark deposit and loan rates had been lowered by the People’s Bank of China a number of times, CCB’s net interest income was reduced by RMB3.57 billion compared with the same period in the previous year. Affected by other technical and incomparable factors, net profit was RMB26.28 billion, a year-on-year reduction of 18.2% but an increase of 213.7% when compared to the previous quarter, and was essentially at par with the second and third quarter of the previous year.
Credit placements appropriately expanded to support economic growth upon the requirements of the macro-economic policies. In the first quarter of 2009, CCB stepped up its lending efforts under controllable risk conditions. As of March 31st, CCB’s net loans and advances to customers were RMB4,204.27 billion, an increase of RMB520.69 billion or 14.1% over the end of last year. CCB’s new loans were concentrated mainly in infrastructure industry related to increasing domestic demand and improving livelihood, as well as other key industries. In particular, support was allocated to 421 projects included in the State’s RMB4 trillion investment packages with a loan balance of RMB194.7 billion. New loans of RMB62.5 billion were extended to ten key industries marked for adjustment and revitalisation by the State, which amounted to 15.7% of all new corporate non-discounted loans. RMB101.82 billion in trade financing both in and off balance sheet was placed to support export-oriented enterprises to deal with challenges. The proportion of discounted bill business in total new loans was 17.3%, which was a relatively low level among peers.
CCB is the first among China’s major banks to set up a small enterprise financial service department at its headquarters. CCB has 83 small enterprise banking centres operating in a “Credit Factory” model. New loans for small and medium-sized enterprises reached RMB168.9 billion, or an increase of 16.4% from the end of last year, yielding a significantly higher rate of growth than the average rate of growth for all corporate loans in the same period. At the same time, CCB also continuously increases its efforts to provide financial services to farmers, the farming industry and rural areas (the “Three Rural Issues”). As of March 31st, the balance of agriculture-related loans had reached RMB491.73 billion, which was an increase of RMB65.3 billion or 15.3% over the end of last year.
CCB further supported to expand the local consumption. Personal loan business continued to grow steadily. In particular, the residential mortgage loans was increased by RMB37.81 billion, an increase of RMB19.33 billion over the same period last year, while personal consumption limit loans and personal business loans were increased by RMB4.29 billion and RMB2.45 billion respectively.
Comprehensive strengthening of risk management and continuous optimisation of asset quality. CCB achieved increases in the number and quality of loans, by paying attention to striking a balance between credit expansion and risk control; insisting on choosing customers and projects according to commercial principles; strengthening its management of loan risk concentration; and conscientiously controlling capital requirements threshold for project loans. As of March 31st, the non-performing loan balance and non-performing loan dropped to RMB81.94 billion and 1.9% respectively, which was a decline of RMB1.95 billion and 0.3 percentage points from the end of last year respectively. The “dual drop” momentum was maintained. Thus the quality of its assets remained leading among all major Chinese commercial banks. In the same period, loans granted to customers with credit ratings of A (inclusive) and above accounted for 92.2% of non-discounted loan balance, an increase of 0.8 percentage points over the same period in the previous year.
In view of the new situation resulting from the financial crisis, CCB has adopted the most prudent principle and has been increasing its allowances for impairment losses on assets in an appropriate and steady manner, in order that its risk mitigation capability can be enhanced. As of March 31st, provision coverage was 141.8%, which was an increase of 10.2 percentage points over the end of last year. The impairment losses increased by RMB7.44 billion compared to the same period last year. In particular, as the scale of credit asset expanded, allowances for impairment losses of performing loan was RMB5.3 billion, representing an increase of RMB4.4 billion over the same period last year. During this period, its capital adequacy was maintained at steady levels, with its capital adequacy ratio at 12.4% and its core capital adequacy ratio at 9.6%.
Steady progress in product and service innovation, with traditional and emerging businesses advancing in concert. CCB continues to push forward the branch transformation to enhance service quality and efficiency. Currently, 11,736 retail branches have undergone functional transformation. At the same time, CCB also optimized the function of CCB Customer Experience Centres to evolve into important platform for collecting customer opinions and suggestions as well as supporting service innovation. By speeding up the pace of constructing electronic channels, there are now 32,622 sets of ATMs installed and in operation. Currently there are 43.56 million phone-banking customers, which represented a year-on-year increase of 39%. To deal with issues of unauthorised use of bank cards and others, CCB has proactively adopted different measures such as upgrading the operating and management systems of self-service facilities, strengthening security management and reminding cardholders to raise their awareness on secured card usage. All these were aimed at providing customers with secured, convenient and quality services.
CCB's intermediary business continued to grow. Incomes from various businesses such as cost advisory service, bank guarantee service for engineering projects, international settlement and electronic banking, witnessed rapid growth on a year-on-year basis. While CCB’s incomes from its wealth management business have been witnessing healthy growth, its underwriting of debt financing instruments continues to lead the banking industry. The total number of credit cards issued increased by 1.62 million pieces from the end of last year, to 20.33 million pieces. Besides good asset quality, consumer spending and business incomes all reported rapid growth.
Under the current complicated domestic and international economic situations, CCB will, in accordance with the central government’s planning and requirements, further its efforts in supporting and providing services for economic development and livelihood improvement. Specifically, it will strengthen its risk management, product innovation and customer service and will strive to meet the various development targets set for the current year.