23 October 2014 – China Construction Bank Corporation (“the Bank”) (Shanghai stock code: 601939; Hong Kong stock code: 939) announced its operating performance for the third quarter of 2014 (note: unless otherwise stated, the data herein are calculated in accordance with International Financial Reporting Standards on a consolidated basis in RMB). As at the end of the third quarter of 2014, the Bank realized a net profit of 190.685 billion, up 7.81% from the same period of 2013, and the annualized return on average assets and annualized return on average equity were 1.58% and 22.14% respectively. The balance of non-performing loans was 105.32 billion, and the Bank’s non-performing loan ratio stood at 1.13%, up 0.14 percentage point from the end of last year. The Bank’s total capital ratio, tier one ratio and common equity tier one ratio were 14.53%, 11.65% and 11.65% respectively, up 1.19, 0.90, 0.90 percentage points respectively from the end of last year. Despite the pressure of the economic downturn, the Bank maintained stable and healthy business development.
Accelerated strategic transformation and strengthened comprehensive financial service capabilities
China Construction Bank Corporation has entered a new stage of development. Even during the pressure of the economic downturn, the Bank maintained a stable risk position. Its balance and increment of residential mortgages ranked first among its peers, and its investment banking, cash management, private banking, financial IC card, credit card and supplementary pension services contributed to its leading strategic emerging business in the industry.
Further progress was made in supporting the real economy. The Bank capitalized on its strengths and enhanced its support of national key projects and weak areas in economic and social development. Infrastructure and construction loan increments accounted for approximately 50% of loan increments to corporations, and the loan balance amounted to 2.44 trillion, supporting a large number of construction projects. As a result, the Bank ranked first in residential finance among its peers.
China Construction Bank had several new breakthroughs regarding its strategic transformation. The Bank endeavored to push forward with an integrated management strategy by expanding its businesses in the trust, lease, fund, insurance, futures, pension finance, and construction costs consulting sectors. CCB initiated an integrated management platform and is currently a leader among its peers regarding non-bank financial licenses. The Bank built up entities in major countries and regions overseas. It completed the acquisition of a 72% share capital of Banco Industrial e Comercial (BICBANCO) in August 2014, which is the largest overseas stake acquisition conducted by a Chinese commercial bank to date, demonstrating a strategic significance for CCB’s international development. Currently, China Construction Bank has 20 overseas branches and subsidiaries, with total assets amounting to over 1 trillion. In addition, the Bank accelerated the integration of functions, frontline staff and marketing teams at its various outlets (the “three integrations”). It pushed forward the “three integrations” services in corporate banking, bringing together the front and back offices and improving the Bank’s integrated service capacity as well as customer satisfaction. It also accelerated innovation of its electronic finance channels. The number of its electronic banking and mobile banking users reached 164 million and 131 million respectively, and the annual turnover via mobile banking amounted to over 3 trillion by the end of June 2014, which enhanced the bank’s inclusive finance service capacity.
Seized market opportunities in serving the real economy and realized stable increase in business performance
Since the beginning of 2014, China Construction Bank has performed well alongside China’s economic transformation; it has strengthened its support of the real economy and improved its economic service capacity via credit structure optimization. By the end of September 2014, the Bank’s total assets increased by 1,372.653 billion, or 8.93% from the end of 2013 to 16,735.863 billion; total loans and advances to customers increased by 759.432 billion, or 8.84% over the end of 2013 to 9,349.489 billion, whereby domestic corporate loans reached 5,731.671 billion, domestic personal loans stood at 2,781.911 billion, discounted bills were 155.613 billion, and loans to customers of overseas entities and subsidiaries reached 680.294 billion. Total liabilities stood at 15,527.684 billion, an increase of 1,238.803 billion, or 8.67% compared with the end of 2013. Customer deposits increased by 759.369 billion, or 6.21% over the end of 2013 to 12,982.406 billion, whereby domestic fixed time deposits were 6,045.440 billion, current deposits 6,555.179 billion, and deposits in overseas entities and subsidiaries 381.787 billion. Shareholders’ equity amounted to 1,208.179 billion, an increase of 133.850 billion, or 12.46% from the end of 2013. The deposit/loan ratio was 72.02% and remained at a rational level.
As at 30 September 2014, CCB posted a net profit of RMB 190,685 million and a net profit attributable to equity shareholders of the Bank of RMB 190,298 million, representing an increase of 7.81% and 7.83% respectively over the corresponding period of last year. Annualized return on average assets and annualized return on average equity were 1.58% and 22.14% respectively. Net interest income was RMB 323,237 million, representing an increase of 12.82% over the same period of last year. Net interest margin was 2.80%, 0.09 percentage point higher than the figure in the same period of last year. Net fee and commission income was RMB 83,801 million, an increase of 4.64% over the same period of last year. Traditionally advantageous products such as the cost advisory service and financial services for housing reform continued to maintain steady growth. Other products such as credit cards, distribution of funds and underwriting of debt securities also performed well.
Maintained an overall steady quality of assets and continued to enhance the level of risk control
In the last three quarters, against the backdrop of a slowdown in economic growth and certain volatility risks in bank credit, CCB pushed forward with the establishment of its credit system to ensure a steady quality of credit assets. As at 30 September 2014, based on the five-category loan classification, CCB had non-performing loans of RMB 105,320 million, representing an increase of RMB 20,056 million as compared with the end of last year. Its non-performing loan ratio was 1.13%, an increase of 0.14 percentage point over the end of last year. The LLR loan coverage ratio was 234.47%, down 33.75 percentage point over the end of last year. As a result of the consolidation of the accounts of Brazilian bank BIC, in which CCB owns a majority stake, non-performing loans increased by RMB 5,439 million. Excluding this factor, the balance of non-performing loans was RMB 99,881 million, the NPL ratio was 1.07%, and the NPL coverage ratio was 244.87%.
While steadily improving its operating performance, China Construction Bank achieved stable asset quality via the following measures: 1) It continued to optimize its credit structure by consolidating the Bank’s traditional advantages, supporting the real economy and livelihood sectors, and cutting loans to industries with significant excess capacity; 2) It proactively responded to the evolving macro-economic environment, enhancing centralized control and management of credit risk at the group level, and strengthening forward-looking risk management; 3) It improved long-term mechanisms for credit risk management and launched an annual campaign on the prevention and management of credit risk; and 4) It made continual efforts to enhance the construction of its credit system and boost its overall fundamental management skills to ensure the stability of the Bank’s overall asset quality.
This year marks the 60th anniversary of China Construction Bank. The Bank is well positioned and has solid fundamentals, impressive operating specialities and strong competitive advantages. With a focus on advancing the business strategy of “integration, multi-function and intensiveness”, the Bank aims to further create value, which has already been widely recognized by media from home and abroad; it was placed second in the “Top 1000 World Banks” in terms of tier-one capital by The Banker magazine, and was named “the Strongest Bank in China” for 2014, an exclusive award granted by The Asian Banker magazine.
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