Loan targets will remain, ICBC says
Industrial and Commercial Bank of China said it would not adjust loan targets or accelerate lending, even though the world's second biggest economy is slowing and the government is relaunching infrastructure projects to boost growth.
China's largest lender by assets said loan growth remained steady in May even though the four largest lenders in China together posted near-zero loan growth in the first two weeks of the month.
'Loan growth in recent months has been faster than our set targets,' ICBC president Yang Kaisheng said yesterday at the annual general meeting. The bank would not lower loan growth targets of 12 per cent that it set at the start of the year, he said.
Loan demand has been uncharacteristically low in the past few months, and analysts say there is a mismatch between companies that need money and those that banks are willing to lend to.
Many lenders have limited the credit provided to property and industries suffering from overcapacity. Early this year, economists said mainland banks would probably extend 8 trillion yuan (HK$9.8 trillion) of loans for the year.
Yang said ICBC would continue its preference of extending loans to strategic emerging industries, advanced manufacturing, the service and cultural sectors, and to small and micro-enterprises.
'We will meet the demands of the real economy, because we know the economy determines finance, and only when the economy is good, can we banks be good,' he said.
In terms of deposits, Yang that said while growth had been weaker than in past years, ICBC still held a leading position in deposit base and growth.
ICBC had about 2 trillion yuan more than its closest competitor in outstanding deposits, and its loan-to-deposit ratio was lower than 65 per cent, said Yang.
The bank's non performing loan ratio stands at around 0.9 per cent, and the bank's loan loss coverage ratio has reached 280 per cent, meaning that for every yuan of bad loans, ICBC has 280 yuan to cover it.
The lender does not hold any sovereign debt from European countries that are now in crisis, and the bank had limited exposure in the region. Operations between ICBC and European banks remained normal.
In 2011, ICBC posted its slowest profit growth in three years, with net profit rising 14 per cent to 61.3 billion yuan (HK$75.3 billion) year on year.
The bank said in late April that loans to strategic emerging industries would double compared to last year. Loans to advanced manufacturing would increase to 25 per cent of total loans, and loans to companies in the services sector would rise to more than 20 per cent of total loans this year, Yang said.
Chinese banks are expected to post slower growth in profits due to a decelerating economy, increased competition and rising credit costs.
The bank's share price rose 7 cents or 1.51 per cent to HK$ 4.72 yesterday.