ICBC Business Review
Industrial and Commercial Bank of China was established on 1 January 1984. On 28 October 2005, the Bank was wholly restructured to a joint-stock limited company. On 27 October 2006, the Bank was successfully listed on both Shanghai Stock Exchange and The Stock Exchange of Hong Kong Limited.
Through its continuous endeavor and stable development, the Bank has developed into the leading bank in the world, possessing an excellent customer base, a diversified business structure, strong innovation capabilities and market competitiveness. The Bank regards service as the very foundation to seek further development and adheres to creating value through services while providing a comprehensive range of financial products and services to 8.60 million corporate customers and 680 million personal customers. The Bank has been consciously integrating the social responsibilities with its development strategy and operation and management activities, and gaining wide recognition in the aspects of supporting pandemic containment, promoting inclusive finance, backing poverty alleviation and rural revitalization, developing green finance and participating in public welfare undertakings.
The Bank always keeps in mind its underlying mission of serving the real economy with its principal business, and along with the real economy it prospers, suffers and grows. Taking a risk-based approach and never overstepping the bottom line, it constantly enhances its capability of controlling and mitigating risks. Besides, the Bank remains steadfast in understanding and following the business rules of commercial banks to strive to be a century-old bank. It also stays committed to seeking progress with innovation while maintaining stability, continuously enhances the key development strategies, actively develops the FinTech and accelerates the digital transformation. The Bank unswervingly delivers specialized services, and pioneers a specialized business model, thus making it “a craftsman in large banking”.
The Bank was ranked the 1st place among the Top 1000 World Banks by The Banker, the 1st place in the Global 2000 by Forbes, and the 1st place in the list of commercial banks of the Global 500 in Fortune for the eighth consecutive year, and took the 1st place among the Top 500 Banking Brands of Brand Finance for the fifth consecutive year.
Financial Highlights
In 2020, the Bank strived to overcome the impact of the COVID-19 pandemic and changes in the external environment, actively implemented the fee reduction and profit concession policy, enhanced financial services for the real economy, actively empowered business with technology, and strengthened risk prevention and control, so as to maintain prudential operation and development. In the year, the Bank realized a net profit of RMB317,685 million, representing an increase of RMB4,324 million or 1.4% as compared to the previous year. Return on average total assets stood at 1.00%, and return on weighted average equity was 11.95%. Operating income amounted to RMB800,075 million, representing an increase of 3.1%, of which, net interest income grew by 2.3% to RMB646,765 million; non-interest income was RMB153,310 million, up by 6.6%. Operating expenses amounted to RMB206,585 million, representing a decrease of 0.6%, and the cost-toincome ratio was 24.76%. Impairment losses on assets were RMB202,668 million, indicating an increase of 13.2%. Income tax expense fell by 5.1% to RMB74,441 million.
CORPORATE BANKING
The Bank actively supported the construction of infrastructure and major projects that could “make up for shortcomings”, especially the high-quality development of manufacturing, backed the consumption upgrade service industries such as healthcare, education and pension, and energetically developed green finance and inclusive finance. The Bank timely adjusted its credit strategy to support the development of the real economy, meet the fund demand for epidemic prevention and control, resumption of work and production, emergency loans and deferred repayment of principal and interest and that in special periods, and properly relieved the temporary operational difficulties of enterprises affected by the epidemic.
1.Inclusive Finance. At the end of 2020, the balance of inclusive loans to small and micro enterprises amounted to RMB745,227 million, representing an increase of RMB273,706 million or 58.0% over the beginning of the year. The number of such customers was 606 thousand, up 183 thousand. The average interest rate on inclusive loans granted in the year decreased by 39 basis points from the prior year to 4.13%. Inclusive farmer business loans and inclusive small and micro enterprise agriculture-related loans totaled RMB152,187 million, representing an increase of RMB40,611 million or 36.4% over the year beginning; the number of such customers was 98 thousand, up 15 thousand; the number of small and micro financial business centers was 324, up 36 over the end of the previous year.
2.Institutional Banking. The Bank actively cooperated with MOF and local financial departments to promote the electronic reform of local non-tax collection, and it is the first one in the industry to launch an integrated social security service platform — “ICBC e Social Security”. It established a unified management system for the centralized clearing agency business of Shanghai Clearing House, fully covering the qualifications of the centralized clearing agency business in the interbank market. The Bank spared no effort to support epidemic prevention and control. It quickly rolled out the “emergency material management system” and “campus epidemic prevention registration management system”, and launched the special anti-epidemic columns such as “ICBC e Government Service” online donation and “ICBC e Social Security”, to help with epidemic prevention and control and resumption of work and production.
3.Settlement and Cash Management. At the end of 2020, the Bank maintained 10,106 thousand corporate settlement accounts, representing an increase of 7.0% over the end of the previous year. The volume of corporate settlements reached RMB2,518.24 trillion, up 5.0%. The Bank had 1,447 thousand cash management customers. The number of global cash management customers reached 8,787, representing an increase of 10.2%.
4.International Settlement and Trade Finance. In 2020, domestic branches disbursed an aggregate of USD63,076 million in international trade finance. International settlements amounted to USD3,242,127 million, of which USD1,318,726 million was handled by overseas institutions.
5.Investment Banking. The Bank constantly enhanced the capability of investment banking in serving the real economy. The Bank improved the product system covering “one advisory service, two certificates and three e-services”, launched an innovative intelligent financial solution, and promoted the intelligent upgrading of advisory services. In 2020, the Bank acted as the lead underwriter for 2,632 Chinese bond projects with a total value of RMB1,904,204 million, ranking No.1 in the domestic market.
6. Discounted Bills. In 2020, discounted bills amounted to RMB1,474,935 million, representing an increase of 8.0% year on year, ranking first in the market. Discounted bills for small and micro enterprises reached RMB429,809 million, with an outstanding balance of RMB208,907 million.
PERSONAL BANKING
In 2020, the Bank continued to deepen the No.1 Personal Bank Strategy, consolidated personal customer base, strengthened the FinTech empowerment, and further enhanced its market competitiveness. At the end of 2020, personal financial assets totaled RMB16.0 trillion. Specifically, the personal deposits arrived at RMB11,660,536 million, representing an increase of RMB1,182,792 million or 11.3%; the personal loans stood at RMB7,115,279 million, an increase of RMB731,655 million or 11.5%. Its personal customers increased by 30.24 million to 680 million.
1.The Bank strengthened deposit service innovation. It rolled out deposit products for key customer base such as Fu Man Yi, Happy Deposit, exclusive deposit of social security card, and themed deposit products like red CDs, and took the lead in the industry to launch the function of large-denomination CD negotiability, driving the stable growth of saving deposits. According to the PBC’s requirements on interest rate liberalization reform, the Bank steadily pushed forward the LPR conversion for personal loans. It strengthened innovation of loan business focusing on the key consumption markets such as pension, automobile, leasing, education and home decoration, and improved the consumer finance services. In the face of the impact of COVID-19, the Bank well performed in rendering emergency services in response to the call of the state and regulatory requirements, and ensured that personal financial services were uninterrupted without losing the quality. It further advanced the transformation of online, digital and intelligent operation transformation, and helped enterprises and residents resume production and work and reopen businesses and markets.
2.Private Banking. At the end of 2020, the Bank had 102 thousand personal customers with financial assets of RMB8.00 million and above, an increase of 11,517 or 12.8% over the end of last year; the assets under management totaled RMB1.8 trillion, an increase of RMB238.7 billion or 15.4%. As at the end of 2020, the number of personal customers with the average monthly/daily financial assets of RMB6 million and above for the past six months was 182 thousand, an increase of 23,750 or 15.0% over the end of last year; and the assets under management totaled RMB2.2 trillion, an increase of RMB282.8 billion or 14.9%.
3. Bank Card Business. By the end of 2020, the Bank issued 1,127 million bank cards, an increment of 55.31 million compared with the end of last year. Specifically, 967 million debit cards and 160 million credit cards have been issued. The overdraft balance of credit cards reached RMB681,610 million. In 2020, ICBC bank cards registered a spending volume of RMB21.46 trillion, including RMB18.88 trillion from debit cards and RMB2.58 trillion from credit cards.
ASSET MANAGEMENT SERVICES
1.Wealth Management Services. The Bank actively advanced the net worth-based transformation of wealth management products and constantly improved product structure. Both the product scale and the investment scale under the New Rules on Asset Management exceeded RMB1 trillion. At the end of 2020, the balance of non-principal-guaranteed wealth management products stood at RMB2,708,427 million.
2.Asset Custody Services. The mutual fund under custody continued to develop quickly and the Bank was the first among domestic peers with custody size of more than RMB3 trillion. The insurance assets under custody continued to lead the industry, and its leading edge continued to expand, with the custody scale exceeding RMB5.4 trillion. The Bank made an important breakthrough in global custody business, acted as the depositor of the first Chinese depository receipt (CDR) in China and conducted the first CDR transaction. Seizing the business development opportunities brought by the New Rules on Asset Management, the outsourcing of asset management product operation1 developed rapidly, with a size of over RMB1.5 trillion. At the end of 2020, the size of custody business reached RMB19.6 trillion.
3.Pension Services. At the end of 2020, the pension funds under the Bank’s trusteeship amounted to RMB326.0 billion; the Bank managed 11.36 million individual enterprise annuity accounts, and the enterprise annuity funds and occupational annuity funds under the Bank’s custody totaled RMB955.7 billion. The Bank led other banks in terms of the scale of enterprise annuity funds under the Bank’s trusteeship, number of individual enterprise annuity accounts and enterprise annuity funds under the Bank’s custody.
FINANCIAL MARKET BUSINESS
1.Money Market Activities. In the RMB money market, the Bank actively provided liquidity supply during the COVID-19 pandemic, reasonably strengthened fund operation, and ensured liquidity support for small and medium financial institutions on the premise that risks were controllable, making great contributions to the smooth operation of the money market. In the foreign exchange money market, the Bank enhanced the proactive and forward-looking management of foreign exchange liquidity, to ensure the liquidity safety of its foreign currency funds. The Bank took advantage of various investment and financing instruments in the foreign exchange money market to improve the profitability of fund operation. Both the business volume and the number of customers of non-bank lending went up. It enhanced the capability of quotation for non-USD market making, and entered into the first batch of CHF and KRW-denominated lending transactions in China Foreign Exchange Trade System. It took an active part in the innovation of the domestic foreign exchange money market, and entered into the first EUR, CAD and JPY-denominated repurchase transaction with domestic RMB bonds pledged as collateral.
2.Investment. In terms of RMB bond investment, the Bank actively invested in various bonds to fuel the growth of the real economy. It vigorously invested in bonds in the pandemic areas and bonds with proceeds mainly used for pandemic prevention and control, in an effort to provide strong financing support for the pandemic prevention and control. Both the quality and the efficiency of corporate bond investment in serving the real economy kept improving, and the investment fields involved energy, manufacturing, transportation and other important industries. The Bank continued to enhance the management of investment portfolios, and took various steps to improve return on investment. In terms of foreign-currency bond investment, the Bank met Chinese-funded enterprises’ financing demands abroad, and strengthened investment in high-rating bonds with a good credit quality, a high credit rating and an ample interest spread. Portfolio was optimized to diversify investment risks and enhance the overall yield and credit quality of the portfolio.
3.Financing. The Bank steadily advanced the online migration of interbank deposits, and actively leveraged the advantages of less contact and high efficiency of online transactions during the COVID-19 pandemic. Its online interbank deposit size ranked first in the market. For details on the Bank’s CDs and debt securities issued, please refer to “Note to the Financial Statements: 33.Certificates of Deposit; 35. Debt Securities Issued”.
4.Treasury Trading Business on Behalf of Customers. In terms of foreign exchange settlement and sales on behalf of customers and foreign exchange trading, the Bank actively assisted with the pandemic prevention and control, organized its foreign exchange settlement and sales line to establish a green channel at the first time, and gave priority to the foreign exchange settlement and sales business handled for the purpose of pandemic prevention and control. In terms of paper commodities trading, the Bank suspended the opening of new positions and new accounts for some paper commodities transactions in response to the drastic fluctuations of international commodity market, so as to protect the rights and interests of customers and prevent market risks. In terms of corporate commodity derivative trading, the Bank conducted an in-depth survey of customer demands, advanced key customer marketing and provided targeted hedging trading strategies. In terms of the over-the-counter bond business, the Bank distributed the special government bonds for pandemic control, China Development Bank’s bonds with the theme of “anti-pandemic”, “poverty alleviation”, “response to climate change” and “protection of the Yangtze River” and the over-the-counter local government bonds in four provinces and cities to investors in the over-the-counter market, contributing to the national fight against the virus and poverty and supporting economic growth. In the area of foreign institutional investors trading business in the China’s Interbank Market, the Bank took an active part in serving foreign institutional investment customers from nearly 60 countries and regions all over the world, and fully meeting their investment and trading needs in China’s Interbank Market.
5.Asset Securitization Business. The asset securitization business effectively supported the Bank in disposing of non-performing loans, revitalizing stock assets, economizing capital occupation and optimizing credit structure. In 2020, the Bank issued 18 assetbacked securities totaling RMB142,600 million, including 10 residential mortgage-backed securities (RMBS) totaling RMB137,158 million, and eight non-performing asset-backed securities totaling RMB5,442 million.
6.Precious Metal Business. The Bank optimized the supply of physical precious metal financial services from aspects of product innovation and service upgrading, to meet customers’ demands for the allocation of precious metal hedging assets. In 2020, the Bank ranked first among all dealers in Shanghai Gold Exchange in terms of trading volume, clearing amount and gold leasing scale.
FINTECH
With a successful progress in ecosystem (ECOS) development, the Bank has made more efforts in the construction of 5G, data center, cloud computing and other new-type digital infrastructure, reinforcing production and operation safety. The Bank accelerated management system and mechanism reforms, and relied on the fifth generation of core banking system to boost the development of digital business forms and digital transformation and upgrading of the Bank.
In 2020, the Bank was ranked at first place in the banking industry for seven consecutive years in CBIRC’s IT supervision ratings. Its seven achievements won the annual Banking Technological Development Award from PBC, the most among its peers in the industry. In particular, the distributed technology system received the first prize of the above award. The Bank won the “Best Financial Innovation Award” from The Chinese Banker for the fifth consecutive year. Besides, it was rated with multiple FinTech innovation awards, e.g. “Best Internet of Things Implementation in China”, “Best Process Automation Implementation in China” and “Best API and Open Banking Implementation” by The Asian Banker.
1.Upgrading Digital Infrastructure. The integration and innovation of technology and business were deepened and the construction of new infrastructure was advanced with remarkable achievements made. A series of new enterprise-level technology platforms with strong service capability and industry-leading advantages were built up based on 5G+ABCDI1, through which a whole-process new technology transformation and application mechanism was established, covering forward-looking trend tracking, study and prediction, key technology research breakthrough and implementation of business scenario innovation.
2.Establishing Digital Business Form. Relying on the ECOS, the Bank fully established a new digital business form to boost the coordinated development of retail, corporate business, government affairs, rural business, and other fields of business, and realized the replacement of old drivers with new ones in business operation, quality upgrading, and efficiency improvement.
3.Reinforcing Production Safety. The Bank took the initiative to deal with the new challenges brought by the complex and volatile external situation and technological reforms and reinforced production safety such that the safe production and operation throughout the Group is maintained at a high level and the production and operation capacity of technical support, monitoring and analysis, emergency response, performance planning and management and control were pushed to a new level.
4. Further Reform of Fintech Governance and Management. The Bank deepened the layout of FinTech consisting of “one department, three centers, one subsidiary, and one research institute”. It increased FinTech investment and unleashed the vitality of the Bank’s FinTech innovation. In 2020, the Bank invested RMB23.819 billion in FinTech and had 35,400 FinTech personnel, accounting for 8.1% of all employees across the Bank.
INTERNET FINANCE
The Bank deepened the interconnection of government, business and consumption (GBC) fronts, to serve the digital transformation of the state, government and enterprises, and enhance customers’ financial service experience. In 2020, the internet financial transaction amount hit RMB640.38 trillion, an increase of 1.2% from the end of the previous year; and its proportion rose by 0.6 percentage points from the end of last year to 98.7%.
1.Deepening the Digital Transformation of Government Service. The Bank created 5,287 effective internet scenarios in the fields of intelligent government service, intelligent travel, healthcare and social security, intelligent campus, judicial finance and poverty alleviation through consumption.
2.Facilitating the Internet-based Transformation of Industries. ICBC Cloud Platform: The “industry + finance” integrated services are provided, covering six major industries and 19 segments. More than 20 standard cloud services including Education Cloud, Party Building Cloud, Property Management Cloud and HR Cloud were launched, to become “available immediately upon renting”. API Open Platform: The platform provides customized and component-based API services, opening over 120 products that fall in 18 categories and more than 1,900 application interfaces, thus steadily elevating the open capacity and the number of partners. Ju Fu Tong: The “Ju Fu Tong” scenarios-embedded comprehensive financial services were promoted to serve more than 10 industries including government service, transportation, medical care, tourism and agriculture. Besides, it carried out cooperation with a number of governmental, industrial and internet-based consumption platforms, e.g. 12306. ICBC Enterprise Mobile Banking: The Bank innovatively launched Enterprise Mobile Banking 3.0 based on the needs of corporate customers, realizing new technology applications such as voiceprint authentication, digital-human customer service and OCR recognition.
3.Upgrading Online Personal Services. ICBC Mobile: The Bank strengthened the application of technological innovations. It innovatively launched Mobile Banking 6.0, created “Customer Manager Cloud Studio” and “Cloud Outlet”, and introduced functions such as vocal print login, AR recognition of foreign currency, and AI intelligent recommendation. ICBC Mall: The Bank completed the version 3.0 upgrade project for ICBC Mall, and launched interactive shopping experience functions such as face registration and APP aggregate payment. ICBC Link: The Bank refined user experience by upgrading the version 5.0 of ICBC Link and fully optimizing the functional layout, process and experience of main interface. ICBC e Life: The Bank established an open ecosystem composed of online campaign pages, APP, WeChat applets, WeChat official account, and life account, to realize the transformation of comprehensive operation. Mobile Payment: It carried out such activities of 22 phases in total, reaching 33.80 million person-times of customers, and successfully issued nearly 5.00 million consumption coupons, directly driving consumption of approximately RMB0.47 billion. ICBC e Wallet: The application areas covered government affairs, people’s livelihood services, transportation, membership management, house purchase services, consumer finance and other scenarios, serving more than 33.00 million customers.
CHANNEL DEVELOPMENT AND SERVICE ENHANCEMENT
The Bank fully implemented the coordinated development strategy of serving the country and regions, kept close track of the development trend of regional market economy, and assisted in poverty alleviation. With “stabilizing aggregate, optimizing layout, making up for deficiencies, and improving efficiency” as the main theme, the Bank comprehensively propelled the strategic adjustment and structural optimization of outlets, to effectively improve the service coverage of core regions, county markets and high-quality customer groups.
1. Channel Development. Outlets were optimized and adjusted effectively. The Bank deepened the integration and coordination of online and offline channels. The Bank actively explored the transformation and innovation of outlets. At the end of 2020, the Bank had 15,800 outlets, 25,167 self-service banks, 79,672 intelligent devices, and 73,059 ATMs with trading volume of RMB5,907.8 billion.
2.Service Enhancement. The Bank continuously improved the quality of customer services. By building a new ecosystem of operational service process, it promoted an integrated operation model of online channels, offline outlets and back-office centers in 27 types of personal and corporate scenarios, to facilitate the online, collaborative and efficient operation of customer services. The Bank made every effort to conduct regular epidemic prevention and control. The Bank propelled the upgrading of public welfare service brand of outlets. It continued to upgrade its service brand “ICBC Sharing Stations” for inclusive service and people’s benefit, and accelerated the establishment of a five-in-one service system including “sharing and convenience for the people, property alleviation for people’s benefit, public welfare for the people, propagating and supporting the people, integrating and benefiting the people”.
3.Consumer Protection. The Bank endeavoured to meet the demands for financial services in special periods. The Bank improved consumer protection rules and measures. In 2020, the Bank’s “Customer Service and Complaint Management System” recorded a total of 141 thousand customer complaints, including 892 personal customer complaints per 100 outlets and 446 personal customer complaints per RMB100 billion assets, involving such businesses as credit card, personal banking and internet finance, which were mainly from areas such as Zhejiang, Sichuan, Hebei, Shandong and Beijing.
HUMAN RESOURCES MANAGEMENT, EMPLOYEES AND INSTITUTIONS
1. Human Resources Management. The Bank optimized its institutions and employees. By adhering to the human resource efficiency improvement ideas of “serving strategy, scientific configuration, reducing consumption and enhancing efficiency, cultivating talents, and stimulating vitality”, it effectively guaranteed the input of human resources in key strategic areas, business lines and professional talent teams. The Bank kept improving the quality and effectiveness of education and training. Focusing on strategic transmission, key projects were developed, such as the “No.1 Personal Bank” and the “Preferred Bank for Domestic Foreign Exchange Business”. Concentrating on talent training, it carried out trainings on job knowledge and skills, new products, new business and new process promotion, and deepened the implementation of reading activities for all employees, to explore advanced trainings covering the entire career cycle and serve the growth of employees’ performance.
2. Remuneration Policy. The Bank adopted a remuneration policy that was in line with corporate governance requirements, in combination with sustainable development targets, in adaptation to risk management system and talent development strategy, and well-matched with employees’ value contribution, so as to advance the sound operation and sustainable development of the whole bank. According to the principle of “efficiency first and consideration of impartiality”, the Bank continuously optimized the remuneration resource allocation mechanism with value creation as the core, transmitted the Group’s strategic objectives for business management, and allocated more remuneration resources to the grassroots employees, for the purpose of mobilizing and inspiring the business vitality of institutions at all tiers.
3. Basic Information on Employees and Institutions. As at the end of 2020, the Bank had a total of 0.44 million employees, including 417 thousand employees in domestic branches, 7 thousand employees in domestic subsidiaries, and 16 thousand employees in overseas institutions.
INTERNATIONALIZED AND DIVERSIFIED OPERATION
Internationalized Operation. The Bank provided comprehensive services for high-level opening-up, and accelerated the implementation of the strategy to become the preferred bank for domestic foreign exchange business. The local and foreign-currency integrated operation system was improved, and efforts were made to enhance cross-border financial services and provide targeted and efficient services for the new development pattern. The Bank harnessed its global operation advantages, and launched the “Chunrong Action” to support the stability of foreign trade and investment. It supported enterprises’ resumption of work and production, and helped maintain the stability of global industrial chain and supply chain. The Bank actively fulfilled its social responsibilities in supporting the fight against the COVID-19 pandemic in the countries and regions where its overseas institutions are located.
RISK MANAGEMENT
In 2020, the Bank’s overall objective was to “build an enterprise risk management framework that matches a world-class and modern financial enterprise with global competitiveness”. It focused on the “management of personnel, assets, defense lines and bottom lines”, continuously improved the top-level design of risk management, and enhanced enterprise risk management based on the path of “active prevention, smart control and comprehensive management”. The Bank revised and ameliorated the enterprise risk management system, performed risk management responsibilities, transmitted risk management culture, and achieved full coverage of institutions, businesses and personnel with risk management measures. Besides, it optimized the risk appetite and risk limit management system, improved risk emergency management capabilities and consolidated the foundation of the Group’s consolidated risk management, to promote the intelligent construction of risk control system, and deepen the application of new technologies such as big data and artificial intelligence.
CAPITAL MANAGEMENT
The Bank implements a group-based capital management mechanism, and takes capital as the object and an instrument for its management activities, including planning, measurement, allocation, application and operation. The Bank’s capital management aims at maintaining appropriate capital adequacy ratio and continuously meeting capital supervisory regulations and policies; ceaselessly strengthening and enhancing the capital base and supporting business growth and implementation of strategic planning; establishing a value management system focusing on economic capital, reinforcing capital constraint and incentive mechanism and improving capital allocation efficiency; innovating and expanding capital replenishment channels, raising capital quality and optimizing capital structure. The Bank’s capital management covers various operating entities in the Group, and its contents include capital adequacy ratio management, economic capital management, capital investment and financing management.
In 2020, the Bank further deepened the capital management reform, strengthened capital saving and optimization, carried forward the disposal of low-efficiency capital occupation, intensified the constraint of economic capital management on risk-weighted assets and continued to elevate the capital use efficiency. It holistically balanced the endogenous and exogenous capital replenishment, and further consolidated the capital base to further reinforce its capacity in supporting the real economy. In 2020, all capital indicators performed well, of which capital adequacy ratio was kept at a sound and appropriate level.