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Buoyant ICBC eyes global growth

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Banking giant Industrial and Commercial Bank of China (ICBC) has delivered stellar first-quarter results for 2014 and is now looking to further its global expansion in cash management and cross-border services. Vice president Zheng Wanchun describes strategies for a period of challenge and opportunity in an exclusive interview with Euromoney

Zheng Wanchun, ICBC
Zheng Wanchun, ICBC
ICBC is one of the world’s biggest banks, with a huge customer base. Your performance is often seen as an indicator of the health of the Chinese economy. What factors made possible your strong first-quarter results for 2014?

ICBC realized a net profit of $11,814 million in the first quarter, representing a year-on-year increase of 6.75%. Return on average total assets and return on weighted average equity were maintained at 1.52% and 22.27% respectively. Both core tier 1 capital adequacy ratio and tier 1 capital adequacy ratio were 10.88%, while capital adequacy ratio was 13.22%.

ICBC has taken a wide range of measures to embrace opportunities and exploit favourable conditions for business development, in response to the deep correction of the global economy, the transformation of China’s economic development pattern, financial regulatory reform and interest rate liberalization. Overall, ICBC managed to maintain healthy, stable development and the operating results outperformed expectations.

One of the most noticeable achievements of ICBC last year was a rise in the volume of cross-border RMB business of around 40%. How fast is this sector growing?

Since cross-border trade using RMB for payment was piloted in 2009, the RMB has been increasingly recognized internationally. The volume of cross-border trade RMB payments has increased year by year, but we have seen particularly fast growth in recent years. The latest data released by the People’s Bank show that the volume reached RMB1.65 trillion in the first quarter, a growth of 60%.

ICBC’s global cash management business grew strongly last year and won some prestigious awards. What has ICBC done to expand and improve its cash management services?

As the first domestic bank promoting cash management services, ICBC is very sensitive to product innovation and service system integrity. We are dedicated to becoming a world-class payment and cash management bank, and will work on customer relationship and product innovation to enhance the business.

We will strengthen our marketing to improve our market share based on our client relationship. We will enhance product innovation to fulfil customers’ needs. ICBC’s cash management business combines more than 70 different products already. We will also continue to improve our global service reach. ICBC is the first Chinese bank to deliver a global cash management service.

We have an Asia-Pacific cash management centre in Hong Kong, along with a China-Africa cash management framework, set up in 2011, a European cash management centre in Paris, an Americas cash management centre based in Toronto, set up in 2012, and a Singapore cash management centre, set up last year.

2014 marks the 30th anniversary of ICBC. What do you see as the key challenges and opportunities in this anniversary year?

China is likely to sustain stable economic growth at a medium or high speed with continuing progress in economic and social reform. ICBC will embrace the strategic opportunities in China’s transformation and development, but will also face many challenges.

A broad range of opportunities will emerge for the bank’s transformation and development as China accelerates economic structural adjustment, upgrades and transforms traditional sectors, speeds up the fostering of strategic emerging sectors, supports and advances the development of small and micro enterprises and private enterprises, and continuously taps the potential of the regional economy.

Deepening reforms in investment, fiscal revenue and finance will create opportunities for the bank in improving resource allocation, accelerating business innovation and preventing and mitigating financial risks. Also, the constantly increasing degree of economic opening up of China, especially the accelerated cross-border use of RMB, will allow the bank to promote its internationalized and diversified operations.

At the same time, ICBC faces some major challenges. As the Chinese economy is at a critical moment of deepening transformation, some structural imbalances arising in the process will bring about challenges in preventing and controlling external risk. Continued interest rate liberalization reform, constantly strengthening domestic financial regulation and the bank’s status as a global systemically important bank will combine to put higher demand on its capacities in interest rate pricing and capital management.

The bank will also face new challenges in customer expansion and business innovation with continuous development of emerging financial modes, such as internet finance.



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