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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 8,098 thousand corporate customers and 650 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 promoting inclusive finance, supporting targeted poverty relief, protecting environment and resources 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 strategy of mega retail, mega asset management, mega investment banking as well as international and comprehensive development, and actively embraces the internet. 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, ranked 1st place in the Global 2000 listed by Forbes and topped the sub-list of commercial banks of the Global 500 in Fortune for the seventh consecutive year, and took the 1st place among the Top 500 Banking Brands of Brand Finance for the fourth consecutive year.

Financial Highlights

As at the end of 2019, total assets of the Bank amounted to RMB30,109,436 million, RMB2,409,896 million or 8.7% higher than that at the end of the previous year. Total liabilities reached RMB27,417,433 million, an increase of RMB2,062,776 million or 8.1% compared with the end of last year. In 2019, the Bank realized a net profit of RMB313,361 million, representing an increase of RMB14,638 million or 4.9% as compared to the previous year. Return on average total assets stood at 1.08%, and return on weighted average equity was 13.05%, the core tier 1 capital adequacy ratio, tier 1 capital adequacy ratio and capital adequacy ratio calculated by the Bank in accordance with the Capital Regulation stood at 13.20%, 14.27% and 16.77%, respectively. Operating income amounted to RMB776,002 million, representing an increase of 7.0%, of which, net interest income grew by 6.0% to RMB606,926 million; the cost-to-income ratio was 25.79%.

Corporate Banking

At the end of 2019, the number of corporate customers increased by 1,065 thousand over the end of the previous year to 8,098 thousand.

1.Corporate deposits and loans. At the end of 2019, the balance of corporate loans reached RMB9,955,821 million, representing an increase of RMB536,927 million or 5.7%. The balance of corporate deposits hit RMB12,028,262 million, representing an increase of RMB547,121 million or 4.8%.

2.Inclusive Finance. At the end of 2019, the balance of inclusive loans to small and micro enterprises amounted to RMB471,521 million, representing an increase of RMB161,407 million or 52.0% from the year beginning. There were 423 thousand micro and small enterprise loan customers, up 153 thousand. The average interest rate of loans granted in the year decreased by 0.43 percentage points over the prior year to 4.52%. By the end of 2019, there were 288 small and micro enterprise banking centers across the Bank. A comprehensive inclusive financial service system was constructed with the focus on the ICBC Small and Micro Finance Platform and three financing product categories including Quick Lending for Operation, Online Revolving Loan and Online Supply Chain.

3.Institutional Banking. The Bank propped up the e-reform of income and expenditure accounts of national treasury, enhanced the capabilities of serving fiscal departments and budgetary units at all levels, and deeply explored the growth potential of institutional customers in the fields of medical care, education, labor union, religion, public resources, land and resources, housing and construction. The “intelligent government affairs” system was innovated and promoted, to push forward the implementation of multi-engine business cooperation structure consisting of “1 government affairs portal, 12 key extension areas and 22 value-added services”.

4.Settlement and Cash Management. The Bank improved its corporate payment and settlement system, to serve diversified settlement scenes.It promoted its global cash management platform, and deepened its global business by virtue of the Bank’s international strategy, to build a global cash management business system. At the end of 2019, the Bank maintained 9,443 thousand corporate settlement accounts, representing an increase of 13.5% over the end of the previous year, and the volume of RMB-denominated corporate settlements reached RMB2,399 trillion in the year. There were 1,426 thousand cash management customers, and 7,973 global cash management customers, representing an increase of 9.5%.

5.International Settlement and Trade Finance. The Bank actively cooperated with the General Administration of Customs to fully participate in the construction of financial service function projects for the “single window” international trade platform. It reinforced the special management of forfaiting business, and promoted the interbank cooperation. In 2019, domestic branches disbursed an aggregate of USD50,895 million in international trade finance. International settlements amounted to USD2,988,556 million, of which USD1,205,334 million was handled by overseas institutions.

6.Investment Banking. The Bank stepped up the M&A loan support in key fields such as listed companies, industry M&A, reform of state-owned enterprises and the Belt and Road Initiative. The ICBC New Energy (Technical Innovation) Fund and ICBC New Energy (Debt-for-equity) Fund were established in batches. The Bank further upgraded its financial advisory service product system. Five major functions including Research, Expert, Information, Forum and Consulting were put into use on the E-Intelligence think tank. In 2019, the Bank acted as the lead underwriter for 1,802 Chinese bond projects with a total value of RMB1,517,350 million, preserving its No. 1 position in the market in terms of domestic leading underwriting scale.

Personal Banking

At the end of 2019, personal financial assets totaled RMB14.6 trillion. The personal deposits arrived at RMB10,477,744 million, representing an increase of RMB1,041,326 million or 11.0%. The Bank’s personal loans stood at RMB6,383,624 million, an increase of RMB747,050 million or 13.3%. Its personal customers increased by 43.29 million to 650 million, including 14.01 million personal loan customers, up 0.72 million.

1.The Bank promoted the online service of “ICBC e Wallet” and provided customers with financial services such as settlement, wealth management and financing in cooperation with JD and Vanke. It also improved the intelligent services of offline outlets, to boost their intelligent transformation.

2.The Bank launched a series of exclusive deposit products such as “ICBC Lucky Money” and “Fu Man Yi”. It also successively introduced themed CDs including “Suzhou Expo CD” and “Panda CD”, to continuously deepen the innovation of special CD products.

3.The Bank strengthened the cooperation with large developers to steadily advance the development of personal loan business. It accelerated product innovation and promotion, improved the function of loans pledged with personal financial assets, and expanded personal real estate mortgages, consumption and operating portfolio loans.

4.The Bank duly made strategic adjustments according to market changes, to further the transformative development of agency sales business. In 2019, funds under agency sales amounted to RMB589.2 billion, sales of treasury bonds under agency arrangement were valued at RMB76.6 billion, and personal insurance products under agency sales reported at RMB132.6 billion.

5.Private Banking. The Bank was awarded the “Best Private Bank in China” by The Banker for two straight years; and it was also awarded the “Best (Mega) Private Bank in China” by The Asian Banker for three consecutive years. At the end of 2019, the Bank had 90,224 personal customers with financial assets of RMB8 million and above, an increase of 9,504 customers or 11.8% from the end of last year. The assets under management totalled RMB1,554.7 billion, an increase of RMB161.1 billion or 11.6%.

6. Bank Card Business. To accelerate the innovation of debit card products, the Bank successively launched products such as “Kylin Card”, “Forbidden City Card”, “Cute Baby Card”, “Cute Pet Card”, and “Kid Painting Card”. It released the ICBC e Life 3.0, and upgraded personalized and intelligent integrated services. At the end of 2019, the Bank issued 1,072 million bank cards, representing an increase of 80.93 million cards from the end of the previous year. Specifically, 913 million debit cards and 159 million credit cards were issued. In 2019, bank cards registered a spending volume of RMB6.93 trillion.

Asset Management Services

1.Wealth Management Services. The Bank improved its product system structure and successfully created a number of main product lines. It actively facilitated the construction of its wealth management subsidiary — ICBC Wealth Management. At the end of 2019, the balance of non-principal-guaranteed wealth management products stood at RMB2,642,057 million.

2.Asset Custody Services. The Bank achieved sustained and stable development of custody business by actively seizing the development opportunities in the occupational annuity, pension insurance fund, enterprise annuity, public offering fund and insurance markets. The Bank was awarded the “Best Mega Custodian Bank in China” by The Asian Banker and the “Best Insurance Custodian, China” by The Asset. At the end of 2019, the net value of assets under the Bank’s custody reached RMB16.5 trillion.

3.Pension Services. At the end of 2019, the pension funds under the Bank’s trusteeship amounted to RMB197.8 billion; the Bank managed 10.76 million individual enterprise annuity accounts, and the pension funds under the Bank’s custody totaled RMB631.7 billion. The Bank led other domestic 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. The Bank took the following actions in the RMB money market: actively increasing inquiry frequency, tapping deep into customer demand, and adopting other measures to operate funds with intensified efforts and enhanced efficiency; and swiftly responding to the increasingly fierce peer competition and continuously stepping up efforts to develop bond lending business. In relation to the foreign exchange money market: the Bank seized market opportunities and took multiple measures to increase yields and efficiency from foreign fund operation; introduced more types of non-banking counterparty engaged in foreign-currency interbank funding business and expanded the business size and customer base simultaneously, thus giving a strong impetus to the development of real economy; cooperated with China Foreign Exchange Trading System to seek for business innovation, as a move to further consolidate its leading position in the Chinese foreign-currency money market business; and launched as one of the first Chinese banks the foreign-currency bond repurchase transaction in the interbank market and the foreign-currency bond repurchase business accepting RMB bonds as collateral, in a bid to further diversify the mix of foreign-currency financing instruments.

2.Investment. With respect to RMB bond investment, the Bank considered the investment value, yield rate and comprehensive contribution of bonds in each type as a whole before scaling up investments in high-value bonds; as per the bond issue plan, it coordinated efforts to forestall investment value and interest rate risks, and control the holistic interest rate risk of each investment portfolio by arranging the term structure reasonably. In terms of foreign-currency bond investment, the Bank worked hard to study and predict market trends, carried out investment activities in more places and currency types, lengthened terms to a proper extent, and scaled up investment volume at a steady pace.

3.Financing. The Bank reasonably arranged the scale and structure of liabilities including interbank borrowing, structured deposits and large-denomination CDs in order to enhance the supporting capacity of diverse liabilities to asset business growth.

4.Franchise Treasury Business. In the aspect of franchise foreign exchange settlement and sales and foreign exchange trading, the Bank strove to serve enterprises’ needs for money exchange and exchange rate hedging, with a focus on serving the real economy and in active response to China’s Belt and Road Initiative. Besides, it creatively unveiled the RMB foreign exchange currency swap business pegged to the LPR floating rate. With respect to paper commodity trading, the Bank provided value-added services for paper commodity trading customers, satisfying customers’ demand for information and increasing customer loyalty.

5.Asset Securitization Business. The asset securitization business effectively supported the Bank in disposing of non-performing assets, revitalizing stock assets and optimizing credit structure. In 2019, the Bank issued 18 tranches of credit asset securitization programs totaling RMB140,680 million in the mainland.

6.Precious Metal Business. The Bank, as the first Chinese commercial bank, launched a precious metal customization platform that could link creative design enterprises (on the B end) and retail customers (on the C end) in the name of “ICBC (Online Precious Metal) Customized Service”, thus enabling custom-made services to be rendered in a systematic and large-scaled way. In 2019, the Bank ranked No.1 among all SGE members in agent trading volume and clearing volume.

Internet-based Finance

The Bank, to make breakthrough in internet-based government affairs and industrial development and to achieve the strategic objective of building the “No.1 Personal Bank”, worked hard on the public services, industrial and consumption fronts of internet. In 2019, the internet financial transaction amount hit RMB633.05 trillion.

1.Advancement of Core Platforms. ICBC Mobile: the Bank released Version 5.0 of mobile banking, and firstly created the voice navigation and sharing public beta version among peers. At the end of 2019, the number of ICBC Mobile customers reached 361 million. ICBC Mall: it updated Version 2.0 of ICBC Mall and launched new mall and mobile seller center to improve customer experience and intelligent level in all aspects. At the end of 2019, ICBC Mall gained 146 million users. ICBC Link: it released Version 4.0 of ICBC Link, focusing on the positioning of the main portal of scenarios and customer information service center, to optimize the layout and service. At the end of 2019, ICBC Link had 167 million registered users. ICBC Enterprise Mobile Banking: the Bank released Version 2.0 of ICBC Enterprise Mobile Banking, improving service with intelligent customer service, intelligent interaction, intelligent reminder, intelligent marketing. In 2019, ICBC Enterprise Mobile Banking had 2.05 million active users, with activeness leading the industry.

2.Development of Key Business Lines. Payment: the Bank released new online product with functions of “aggregation acquisition plus smart clearing” to meet personalized needs of merchants and optimize user experience. The Bank applied “e-Payment Intelligent Campus” in such scenarios as canteen, supermarket, recharge, payment, parking in campus. Consumer Finance: the Bank enriched ICBC e-Loan and promoted “Credit Granting in Seconds” and “Interconnection” scenario applications in a bid to enhance customers’ experience with internet-based financing. Digital Inclusive Finance: the Bank continued to improve “Small and Micro Enterprise e Loan”, an online financing product system with “Quick Lending for Operation”, “Online Revolving Loan” and “Digital Supply Chain” as core products.

3.Building of a Financial Ecosphere. The Bank strengthened the cooperation in applying digital technology in government affairs, and focused on key fields including intelligent government affairs, intelligent transport, intelligent campus, intelligent administration of justice and poverty alleviation through e-commerce.

Channel Development and Service Enhancement

At the end of 2019, the Bank had 15,784 outlets, 25,895 self-service banks and 82,191 ATMs whose trading volume amounted to RMB8,261.3 billion.

1. Channel Development: The Bank actively improved the geographical distribution of outlets and aligned the outlet network structure better with market resources, significantly improving the ability to cover core areas and high-quality customer groups. The Bank made further headway in making its outlets smarter by making full use of advanced technologies such as blockchain, Internet of Things and artificial intelligence, so as to enrich service scenarios for people’s wellbeing.

2.Service Enhancement. The Bank continued to cement the groundwork and outcomes of its efforts to build a “bank to the satisfaction of customers”, and improved the quality of services across the board. It carried out the “Considerate Services for General Public” campaign, and continued to improve customer experience and the quality of its services.

3.Consumer Protection..The Bank implemented the laws, regulations and regulatory requirements on consumer protection. It established the Corporate Social Responsibility and Consumer Protection Committee under the Board of Directors, in a bid to further improve the customer protection system at the corporate governance level.

Internationalized and Diversified Operation

1.Internationalized Operation. ICBC (Austria) officially opened, and ICBC (Europe) Greece Representative Office and Macau Branch were granted licenses. At the end of 2019, the Bank established 428 institutions in 48 countries and regions and indirectly covered 20 African countries as a shareholder of Standard Bank Group. The Bank also established correspondent banking relationships with 1,445 overseas banking institutions in 143 countries and regions, making its service network covering six continents and important international finance centers around the world. The Bank maintained 129 institutions in 21 countries and regions along the Belt and Road. As at the end of 2019, total assets of overseas institutions (including overseas branches, subsidiaries and investments in Standard Bank) of the Bank were USD405,683 million, an increase of USD21,379 million or 5.6% from the end of the previous year, and they accounted for 9.4% of the Group’s total assets.

2.Diversified Operation. ICBC Credit Suisse Asset Management actively served the real economy and diverse customer demands, and managed to improve the business structure continuously and enhance the quality and efficiency steadily. ICBC Leasing endeavored to improve its ability to provide professional and integrated financial services and continued to pursue transformation to high-quality development while fortifying the groundwork for risk management and control. ICBC-AXA made solid progress in business transformation and enhanced professionalism in investment. It managed to embrace healthy business development on all insurance fronts based on the Group’s channel advantages, recording the strongest performance by a number of operating indicators. ICBC International continued to unleash its growth potential, showing continuous enhancement of market competitiveness and steady improvement in operation effectiveness and asset quality across its four major businesses, i.e. investment banking, sales and trading, investment management and asset management. ICBC Investment focused work on the strategic plans for supply-side structural reform and strengthened coordination with the Group. It diversified fundraising channels, strengthened enterprise risk management and control, pursued market-oriented debt-for-equity swap business in a proactive and prudent manner and kept improving the quality and efficiency of serving the real economy. ICBC Wealth Management, as the first banking wealth manager approved, was among market leaders in terms of business qualifications, product migration and IT system building. As guided by the New Rules on Asset Management, ICBC Wealth Management rolled out over 350 characteristic products. ICBC Technology successfully opened for business in Xiongan New Area. The setup of ICBC Technology represented the Banks’ strategic move to build a smart bank relying on the nature of finance and leveraging on the Bank’s strengths in FinTech and integrating innovation capabilities.

Information Technology

1.Reinforcing top-level design and formulating the FinTech development plan. In accordance with the FinTech Development Plan (2019–2021) issued by PBC as well as the Group’s development plan and strategic goal of building into a smart bank, the ICBC FinTech Development Plan (2019–2023) (hereinafter referred to as the “FinTech Plan”) was drafted in a bid to reflect new changes in and new requirements for FinTech development.development. Centering on the requirements to advance the Group’s cross-border, cross-industry, and cross-sector transformation and development, the FinTech Plan would use “finance plus technology” as two great means to build a smart banking ecosystem, push FinTech towards innovative development, and ultimately create a “digital ICBC”.

2.Transforming ICBC toward a smart bank faster and overhauling/optimizing the FinTech organizational structure and R&D model. The Bank spared no effort to deploy a new FinTech framework which consisted of “one department, three centers, one subsidiary, and one research institute”. Releasing the ECOS and opening a new chapter in the building of a smart bank. The ECOS, a smart banking ecosystem, was characterized by a host of achievements, which included the open and integrated cross-border ecology, ubiquitous intelligent applications, highly flexible business support, dual-core IT architecture, automatically controllable new technology platform, and componentized R&D model.

3.By the end of 2019, the Bank had 615 patents issued in total. Added with the 54 new patents gained in the year, the total patents owned by the Bank numbered 603, ranking first industry-wide. The Bank ranked first industry-wide for six consecutive years in CBIRC’s IT supervision ratings. Its seven achievements won the annual Banking Technological Development Award from PBC.

Risk Management

In 2019, the Bank continued to push for development of the enterprise risk management system, strengthened risk data governance, and upgraded risk management technologies and methods, so as to make enterprise risk management more forward-looking and effective. It further improved the enterprise risk management system, enhanced risk appetite transmission and limit management and control, and intensified the capability of risk response and crisis management. The Bank enhanced the Group’s foundation for consolidated risk management, boosted business penetration of non-banking subsidiaries, and strengthened regional risk management of overseas institutions. It enhanced its capability of managing cross risks, strengthened risk management and control of cooperative institutions, and promoted the application of the Group’s investment and financing risk monitoring platform to achieve risk data integration involving different risks, markets, institutions and products. The Bank actively advanced FinTech application such as big data, developed an intelligent risk monitoring system and enterprise-level anti-fraud platform, and continued to upgrade risk measurement models for better application.

Precision Poverty Alleviation

1.The Bank conducted solid work on all aspects of the poverty alleviation, and achieved the steady growth in precision poverty alleviation loans, sustained improvement in comprehensive financial services, remarkable achievements in new poverty alleviation model, steady income increase in counties and cities of targeted poverty alleviation, and expanding social influence in poverty alleviation.

2.Increasing loan granting for poverty alleviation. By closely focusing on the financial needs of poverty-stricken areas and poor households, the Bank increased credit resources to them and continued to increase loan granting for precision poverty alleviation. It promoted the service model of “precision poverty alleviation and agriculture-related supply chain” to steadily lift poor households out of poverty and increase their incomes through loan of industry precision poverty alleviation.

3.Improving comprehensive financial services. The Bank improved the financial services for poverty-stricken areas and poor households in various fields in a multi-pronged approach. It actively improved the geographical distribution of outlets and their functions, studied and implemented the overall planning of new outlets in poverty-stricken areas. It continued to adopt fee reduction of personal settlements, and set up tailor-made wealth management products and certificates of deposit in poverty-stricken areas. It generally upgraded “e-Business Dream Plan” to increase financial service support for povertystricken areas through online products. It carried out solid special study on the overall planning for the development of the whole county-based market, including poverty-stricken areas.