Beijing, 21 August 2008 – Industrial and Commercial Bank of China Limited (“ICBC” or the “Bank”, SSE: 601398; SEHK: 1398) today announced its financial results for the six months ended 30 June 2008. Based on International Financial Reporting Standards, ICBC’s profit after tax for the first half of 2008 was RMB 64.879 billion, up 56.75% from the same period last year. Earnings per share were RMB 0.19. According to all the interim results that have been announced so far, ICBC has become the most profitable bank in the world in the first half of 2008.

During the first half of 2008, the Bank has overcome challenges from both the complex and constantly changing operating environment, and negative impact from natural disasters. The Bank further implemented its strategic adjustments and developed its business in an innovative manner, which resulted in outstanding returns for shareholders. In the first half of 2008, ICBC’s return on average total assets reached 1.44%, up 0.42 percentage point from 2007. Return on weighted average equity was 22.8%, up 6.57 percentage points from 2007. While enhancing its profitability, ICBC further strengthened its risk management capabilities, resulting in a substantial improvement in asset quality. As at 30 June 2008, ICBC’s non-performing loan ratio was 2.41%, down 0.33 percentage point from the end of 2007. Allowance to NPL ratio reached 116.08%, up 12.58 percentage points from the end of 2007, further enhancing the Bank’s ability to withstand risks.

The strong performance for the first half was the result of rapid growth in the Bank’s intermediary business. The Bank’s net fee and commission income increased to RMB 24.48 billion, up 48.03% from the same period in 2007. This accounts for 15.8% of the Bank’s operating income, up 1.74 percentage points from the same period last year. During the first half, ICBC has overcome the negative impact from the volatility of financial markets and leveraged its strong customer base, extensive network and innovative product development to further harness its leading position in traditional intermediary businesses such as settlement and agency services, and drive further growth in emerging business areas such as wealth management, asset custody, annuity and electronic banking. All these resulted in further enhancement of the competitiveness of the Bank’s intermediary business. In the first half, ICBC sold RMB 1158.2 billion in wealth management products, up 123% from the same period in 2007. Of this amount, RMB 830.4 billion was the sale of wealth management products developed by the Bank, up 442% from the same period in 2007. The Bank’s revenue from asset custody business increased by 186%, while revenue from its investment banking business increased by 106% from the same period in 2007. ICBC also substantially enhanced the profitability of its intermediary business.

In its lending business, ICBC closely adhered to the macro tightening policy of the central government, reduced lending to sectors discouraged by the policy and provided sufficient credit for the encouraged sectors. By linking lending policies for different sectors with relevant government policies, ICBC effectively managed its loan growth and further optimised its product mix and customer base. The Bank increased loans for key basic industries, high tech industries, new service industries and innovative and energy conserving sectors, and particularly for small and medium enterprises. At the end of June 2008, ICBC’s total renminbi loans of domestic branches reached RMB 3,996.8 billion, up RMB 255.0 billion or 6.8% from the end of 2007.

With regard to the treasury business, ICBC further enhanced its trading platform and risk management system and optimised its investment mix and structure. As a result, the Bank’s yield on non-restructuring bonds increased by 0.35 percentage point from 3.48% in 2007 to 3.83% in the first half of 2008. ICBC also reported steady growth in its deposit base. Total customer deposits reached RMB 7538.7 billion as at the end of June 2008, up 9.3% from the end of 2007. Deposits from other banks and other financial institutions reached RMB 802.4 billion, up 10.3% from the end of 2007.

In the first half of 2008, ICBC made further progress in overseas expansion. During the period, ICBC completed the acquisition of a 20% equity interest in Standard Bank Group of South Africa and a 79.93% stake in Seng Heng Bank in Macau. The Bank’s application for the establishment of its Vietnam Branch has been approved by the China Banking Regulatory Commission, and the Bank is making progress in seeking overseas regulatory approval. In addition, the Bank has received approvals from foreign regulators for the establishment of its branches in Doha and Sydney as well as ICBC (Middle East), which will open for business soon. Industrial and Commercial International Capital Limited, ICBC’s subsidiary in Hong Kong, has also received an investment banking licence. On 5 August 2008, ICBC received the approval from the Federal Reserve Board for the establishment of its New York Branch. Going forward, through acquisitions and applications for the establishment of new branches, ICBC will continue to establish an international business network that focuses on emerging markets, covers major international financial centres and China’s major economic and trading partners, and integrates with the Bank’s domestic operations.   

ICBC further enhanced its risk management capabilities and effectively controlled its operating costs to ensure the healthy and rapid growth of its business. During the first half of 2008, ICBC further improved its comprehensive risk management system. By establishing its risk quota management system, ICBC enhanced its risk control capabilities, and has established the early phase of a systematic comprehensive risk management mechanism. ICBC has also further promoted the application of internal rating engineering for non-retail businesses. It launched the operations of its debt rating system, customer RAROC system and portfolio rating systems, laying a solid foundation for the application of quantitative risk ratings in its comprehensive risk management procedures. ICBC has also completed the construction of the internal rating infrastructure for retail business, and has commenced the system and applications development. In terms of cost control, ICBC’s cost to income ratio was 28.46% for the first half of 2008, down 2.97 percentage points from 31.43% in the same period last year.

While enhancing the value for its shareholders, ICBC is also committed to contributing to the society and has been proactive in performing the socially responsible role of a commercial bank, thereby establishing the Bank as the most profitable, most outstanding and most respected modern financial enterprise. Following the 12 May earthquake in Sichuan, ICBC quickly responded and committed substantial resources in rescue efforts and recovery services under the guidance of the government. Under the threat of aftershocks and other difficult situations such as shortage of water and electricity, ICBC quickly established temporary outlets and offices, installed temporary self-service facilities and opened “tent branches” to resume banking services to meet the needs of the people in the affected area as soon as possible. ICBC became the first bank to reopen for business in the affected area, a true reflection of its commitment to customers: a neighbourhood bank that they can trust.