Beijing/Hong Kong, 30 August 2015 China Construction Bank Corporation (Hong Kong stock code: 939, Shanghai stock code: 601939; “CCB” or the “Bank”) announced its operating results for the first half of 2015 on 30 August (note: unless otherwise stated, the data herein are calculated in accordance with International Financial Reporting Standards on a consolidated basis in RMB). As shown in the interim report, during the first half of 2015, adhering to national development strategies, CCB focused on providing services to support the real economy, pushing forward transformation and innovation, and achieved steady and healthy development. The Bank’s total assets amounted to RMB 18.2 trillion, up 8.81% over the end of last year. Net profit was RMB 132.244 billion. Annualized return on average assets and annualized return on average equity were 1.51% and 20.18%, respectively. The Bank’s capital adequacy ratio and common equity tier one ratio were 14.70% and 12.35%, respectively.
Operating results were in line with expectation and key indicators achieved solid performance
As shown in the interim report, during the first half of 2015, CCB maintained stable and healthy operations and achieved results that are in line with expectation. Net profit amounted to RMB 132.244 billion and net profit attributable to the shareholders of the Bank was RMB 131.895 billion, up 0.97% and 0.94%, respectively over the same period of last year. As at the end of June, total assets increased by 8.81% over the end of last year to RMB 18.2192 trillion. Gross loans and advances to customers increased by 7.20% to RMB 10.1571 trillion. Deposits from customers rose by 6.19% to RMB 13.6970 trillion.
During the first half of 2015, CCB proactively responded to challenges brought about by complex situations. The Bank optimized the assets and liabilities structure and further adjusted its credit and customer structures. The Bank also made timely adjustment to the bond portfolio structure in response to the challenges arising from interest rate liberalization. Net interest income increased by RMB 13.327 billion to RMB 224.619 billion, representing an increase of 6.31% over the same period of last year and accounting for 75.42% of operating income. Net interest margin stood at 2.67%. Net non-interest income increased by RMB 7.763 billion to RMB 73.198 billion, an increase of 11.86% over the same period of last year. Net fee and commission income increased by 5.76% year-on-year. In addition, CCB further strengthened cost control and optimized its expense structure, contributing to a decrease of 0.95 percentage points in cost-to-income ratio to 23.23% compared to the same period last year.
Continued to optimize credit structure and effectively served the real economy
During the first half of 2015, with a focus on the nation’s major strategies and industrial layout, CCB continued to actively facilitate the implementation of important national strategic projects including the “One Belt, One Road” initiative, development of the free trade zones, the coordinated development of Beijing-Tianjin-Hebei, and the Yangtze River Economic Zone to realize the adjustment and optimization of the Bank’s credit structure. The Bank’s infrastructure loans increased by RMB 147.8 billion, accounting for 73.98% of the increase in corporate loans. It sustained its leading position in housing finance, with residential mortgages increasing by 9.61% to RMB 2.4704 trillion, ranking first among its peers in terms of both the increase and the total amount. The market share of entrusted housing finance remained above 50%. The Bank strengthened its financial services to small and micro businesses by renovating micro credit loan service models through applying big data and collaborating with governments of all levels to build credit platforms for small and micro businesses. Loan volume of the Bank’s feature product “Credit Cooperation Loan” exceeded RMB 30 billion and the approval rate of loan to small and micro businesses was 84%. Total online banking loan exceeded RMB 150 billion, serving more than 17000 customers. At the same time, the Bank increased credit support to energy-saving and emission-reduction, environmental protection, and people’s livelihood sectors. The Bank also implemented stringent control on loans to local government financing vehicles and industries with excess capacity, further optimizing its credit structure.
Achieved significant progress in transformation and accelerated development in integrated operation
As shown in the interim report, since the beginning of this year, the Bank has been adjusting and optimizing product supply, function facilities and service models in every branch and sub-branch to further enhance the quality of its integrated services. The Bank further expanded its service functions and efficiency by establishing and enhancing its cross-region, cross-sector and cross-border collaborative mechanism between the head office and branches, as well as building up and improving its round-the-clock services that covers all time zones. Growth rates of key indicators for businesses, products and channels at the centre of the Bank’s transformation significantly outpaced the rates of that for traditional businesses. The separation of front office and back office progressed in an orderly manner. The Bank achieved new breakthroughs in the E.ccb.com e-commerce platform, mobile banking and innovation in product and operation models through internet and information technology. Crucial progress was achieved in construction of the “New Generation Core Banking System” and research and application of big data. To date, the Bank has already established an integrated banking group framework which includes fund, leasing, trust, insurance, and future, making it the industry leader in terms of integrated banking business license. The Bank progressively optimized its integrated financial services, with banking services as the core and complemented by non-banking financial business, providing clients with integrated financial services that cross markets, sectors and borders. As at the end of June 2015, the accumulated amount of debt financing instruments of non-financial enterprises underwritten by the Bank totalled RMB 237.476 billion, ranking first in the industry. The number of the securities investment funds under custody and new funds under custody were both at the top of the market. The Bank also became the only bank among the first batch of agents qualified for distribution of Hong Kong funds in the mainland. The total assets of integrated operation subsidiaries increased by 27.91% over the end of last year to RMB 242.4 billion and net profit increased by 47.62% year-on-year to RMB 2.16 billion.
The Bank’s overseas entities expanded rapidly, achieving significant progress in its internationalization effort. In the first half of the year, CCB Europe opened its branches in Paris, Amsterdam, Barcelona and Milan in June. The Bank’s Chile branch was granted a banking license and became the RMB clearing bank in Chile while CCB’s London branch commenced operation. The Bank was also in the process of application for setting up a branch in Zurich and a subsidiary in Malaysia. In the meantime, the Bank promoted the establishment of a multi-functional marketing service platform and began preparation to set up an offshore funding platform, an overseas project information management platform and an overseas review and approval centre so as to achieve centralization of the overseas entities’ clearing business and build global networks. As at the end of June 2015, CCB had 26 tier-one entities across 24 countries and regions. The international settlement volume in the first half of the year was USD 607.9 billion with a year-on-year growth of 8.70%. The cross-border RMB business on cash basis reached RMB 834.1 billion with a year-on-year growth of 17.38%. The coverage of RMB clearing network expanded to 43 countries and regions.
Strengthened Risk Control Capability and Maintained Stable Asset Quality
In the first half of 2015, in response to the economy’s cyclical correction and structural changes, CCB remained committed to mitigating risks smoothly, strengthening risk warning and prevention, as well as normalising management during the process of development. The Bank continued to conduct inspection on high-risk areas and expedited the disposal of non-performing loans (NPL) to ensure stable asset quality. As at the end of June 2015, NPL ratio was 1.42% and the ratio of provisions for impairment losses to NPL remained relatively high at 185.29%.
In order to mitigate risk and to strengthen risk warning and prevention, CCB conducted multi-dimensional stress tests that covered the macro-economy, real estate, and financial stability. By making use of big data, CCB was able to perform quick screening to identify clients with potential risks and assign a warning level. The Bank rectified weak links in its internal risk control system, improved inadequacies and optimised the system. It also promoted the professionalization of credit offering, established centralized loan-granting centres in the tier-one branches to strengthen areas with weak credit approval. CCB actively explored new models for market-oriented risk mitigation, and developed plans including the collaboration among subsidiaries on the disposal of NPLs and the securitization of restructured assets. Meanwhile, CCB launched a bank-wide campaign called the "Compliance Management Year" to promote the transformation of internal control compliance. The Bank set up a new mechanism of "system establishment based on business lines and compliance control based on the same level entity”. All of CCB’s market risk indicators were well contained within a limited range. The Bank maintained an adequate level of liquidity and a reasonable coverage ratio.
While maintaining robust operations, CCB actively fulfilled its social responsibilities and continued to make donation and contribute to charitable activities in a number of areas including education, healthcare, poverty alleviation and environmental protection. The Bank vigorously expanded green credit to support the development of ecological civilization in China. In addition, the Bank proactively demonstrated the positive corporate image of Chinese corporations, supported the country’s strategic development, and played an active role in promoting the economic and financial cooperation among Asia-Pacific and other key regions in the world. During the first half of 2015, CCB received over 40 important accolades from authoritative domestic and global organisations. The Bank maintained its second place in UK magazine The Banker’s the “Top 1000 World Banks” ranking by tier 1 capital. The Bank also retained second position the “Global 2000” list published by Forbes. In addition, it ranked 29th in Fortune’s “Fortune Global 500”, up nine places from the previous year. It also won the “Best Banks 2015 (China)” from US magazine Global Finance.
Looking forward to the second half of 2015, CCB aims to make the best of the new opportunities from China’s economic transformation under the “New Normal” of the country’s macro-economy. The Bank will fully leverage the comprehensive advantages as a large bank and play an active role in providing supportive financial service to facilitate the implementation of the country’s major strategies. CCB also seeks to optimize its financial service models, increase support to small and micro businesses, agriculture-related enterprises and personal consumption, as well as strengthen and expand the Bank’s leading position in residential housing and entrusted housing finance. In addition, CCB will fully leverage its advantages in internet finance and drive development through innovation. By making solid progress in transformation and shifting to a new growth engine, the Bank is looking to take on a new path of development which will allow it to achieve better quality, efficiency, structure and services, and fully bring out its advantages.
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