Date
19 November 2017
Jiang Jianqing says ICBC's heady days of double-digit percentage growth in earnings are over.  Photo: HKEJ
Jiang Jianqing says ICBC's heady days of double-digit percentage growth in earnings are over. Photo: HKEJ

ICBC no longer in high-growth phase, chairman says

The golden age of fast growth for Industrial and Commercial Bank of China Ltd. (01398.HK) has ended, chairman Jiang Jianqing said.

He cited mainland China’s sluggish economy and a high comparison base as the world’s largest bank reported growth in earnings fell last year to a single-digit percentage for the first time in nine years.

It posted 275.8 billion yuan (US$44.4 billion) in net profit for 2014, up 5 percent from the previous year.

The bank cut its dividend by 2.4 percent, its payout ratio slipping to 33 percent from 35 percent.

Since its listing in 2006, ICBC had maintained double-digit earnings growth, reaching 65 percent in 2007 and falling to 16 percent in 2009 amid the global financial crisis.

The country’s economy is in a phase of reducing excessive capacity, leverage and inventory.

Certain problems in such processes will funnel through to the banking system, Jiang said.

Meanwhile, the bank is gearing up to tackle non-performing loans, which rose to 1.13 percent of total loans at the end of last year, 19 basis points (0.19 percentage point) higher than a year earlier.

ICBC has assessed half of its loan assets, which total over 10 trillion yuan, and will evaluate the other half this year.

It has been granted 1 trillion yuan worth of quota for swapping local government debts with central government bonds, a measure that is viewed as the Chinese version of quantitative easing.

This article appeared in the Hong Kong Economic Journal on March 27.

Translation by Vey Wong

[Chinese version 中文版]

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