Industrial and Commercial Bank of China Limited ("ICBC" or the "Bank", SSE: 601398; SEHK: 1398) today announces its interim results for the six months ended 30 June 2009. Based on International Financial Reporting Standards, ICBC's profit after tax for the first half of 2009 was RMB 66.7 billion, up 2.8% from the same period last year.  Earnings per share was RMB 0.20. The steady growth in earnings resulted in further enhancement in investment return for shareholders. The Bank's annualized return on average total assets and return on weighted average equity reached 1.26% and 20.86%, up 0.05 and 1.43 percentage points from the end of last year respectively.

Since the beginning of the year, the spreading of the international financial crisis and the slow down in the growth of the domestic economy resulted in a complex and challenging business environment. The Bank adhered to the government's macro economic policy and financial regulatory requirements, and emphasized on both development and business management. The Bank effectively overcame difficulties and seized business opportunities, and continued to operate its business in a prudent manner, with effective control of risk and steady growth in earnings. The Bank demonstrated strong sustainability in its business development and capability in withstanding risks.

Firstly, ICBC aligned the roles of supporting economic growth and the business operating principles of a commercial bank, and proactively sought growth in quality lending under the condition that risks are controllable. As a result, the Bank catered for the demand for funds for the economy as a whole, while at the same time offset the impact of narrowing net interest margin on the business operation of the Bank. As at the end of June 2009, total outstanding loans of the Bank reached RMB5,436.5 billion, an increase of RMB864.5 billion or 18.9% from the beginning of the year, representing a significant contribution to the stabilisation and growth of the economy.  The pace and volume of granting loans also reflected the prudent characteristics of the Bank's business operations. While managing its total loans in a sensible manner, the Bank also emphasized on the optimisation and adjustment of its loan portfolio, with growth mainly from the sectors encouraged and supported by government policies. During the first half of the year, new loans for key national projects and companies with leading positions in their respective industries reached RMB449.9 billion, providing effective support for the implementation of government's policy of stimulating domestic demands through investments. ICBC also explored new market segments for loan growth including new energy, new technology, energy conservation and environmental protection and modern service industries to ensure continual growth in its lending business. As at the end of June 2009, the total outstanding loans for green projects including new energy, consolidated resources utilisation, energy conservation and environmental protection projects reached RMB388.8 billion. Outstanding trade financing loans reached RMB96.67 billion, up 80% approximately, providing important support for companies that encountered temporary shortages of funds, particularly for those in the imports and exports sectors. ICBC also increased lending to small and medium enterprises whose businesses are in line with government policies and help create job opportunities. Since the beginning of the year, ICBC has established close to 1,000 new dedicated institutions for small enterprises. In the first half, total financing for SMEs increased by RMB477.3 billion, or 26%, 7 percentage points higher than the total growth in lending business for corporate customers. In terms of supporting domestic consumption, total outstanding personal loans increased by RMB138.6 billion or 16.7% from the beginning of the year to meet the increased financing needs as a result of expansion in consumption.

While rapidly growing quality lending, ICBC also accelerated its exit from lending to sectors that have excess production capacities, and to companies that failed to meet environmental standards, and high energy consumption companies. This helped the Bank effectively adjust and optimise the industry structure of its loan portfolio. Since the beginning of the year, ICBC has implemented the "Green lending labeling" system in its credit management system, and classified all project loans under this standard. For those that failed to meet the requirements, ICBC insisted on withdrawing its lending. Currently, among the more than 60,000 companies that have loans from ICBC, 98.6% are classified as environmentally friendly or meeting environmental requirements, and the loans involved accounted for 99% of total loans outstanding. The remaining ones are currently under the certification process by relevant government departments.   

More importantly, in order to ensure the quality of new loans, the Bank implemented more stringent risk controls during the first half, further improved the system of credit policy for individual industries, and strengthened the inspection on key sectors and credit products. As a result, loan applications of 121 legal person accounts were denied or terminated at the headquarters level alone, with a total amount of RMB91 billion. This effectively contained the lending to potentially high risk customers and projects, and controlled the credit risks from the source. As a result, the Bank maintained high asset quality despite the economic downturn. As at the end of June 2009, the Bank continued to achieve declines in both the balance and ratio of non-performing loans.  The Bank's NPL decreased by RMB5.8 billion from the beginning of 2009, and the NPL ratio dropped by 0.48 percentage point to 1.81%. Allowance to the NPL ratio increased by 8.05 percentage points, from the beginning of 2009, to 138.2%. In the first half, the Bank further strengthened the risk management for its foreign currency bond investments and other assets. The Bank seized the opportunity of a rebound in financial markets and recovery of liquidity in April and disposed of part of its foreign currency bond holdings to further reduce the risk exposure and effectively control market risk.

Secondly, the Bank's emerging intermediary businesses, including investment banking, debt financing instrument underwriting, bank wealth management products, annuity, bank cards and electronic banking, grew rapidly during the period, and  became the key earning growth driver for the Bank. In the first half, revenue of the Bank's intermediary business reached RMB28.3 billion, an increase of 17% year on year, further optimizing the Bank's revenue structure. The investment banking business recorded a revenue of RMB 7.143 billion, an increase of 48.1% year on year. Investment banking accounted for approximately 25% of total revenue of the intermediary business, the highest among the domestic peers. The total underwriting amount of short-term financing notes, medium-term notes and other debt financing instruments reached RMB142.4 billion, the highest in the market. The sales of wealth management products issued by the Bank reached RMB1,084.1 billion, an increase of 125.5% year on year, of which sales of corporate wealth management products reached RMB688.8 billion, an increase of 144.4% year on year, and generated RMB1.836 billion in corporate wealth management income, an increase of 25.9%. ICBC continued to be the leader in the corporate annuity market both in terms of the number of customers and scale of business. The number of corporate legal person accounts exceeded 16,000, and the number of individual annuity accounts has reached 5.99 million. Total annuity funds under management reached RMB5.7 billion, and the annuity funds under the Bank's custody was RMB74.2 billion. ICBC further strengthened its leading position in the bank card market. The number of the newly issued cards of the Bank reached 28.56 million with consumption volume reaching RMB617.2 billion, an increase of 62.3% year on year, of which the number of newly issued credit cards reached 6.65 million with consumption volume of RMB199.5 billion, an increase of 80.1% year on year. The Bank's leading advantage in bank card market continued to grow. Transaction volume of the Bank's electronic banking business reached RMB70 trillion, accounting for 46.2% of the Bank's total business volume, an increase of 3.1 percentage points compared with the beginning of the year.

Thirdly, the Bank continued to make progress in its overseas expansions and development of integrated businesses, and profit contribution from these areas increased year by year. The estimated return on the Bank's investment in The Standard Bank of South Africa reached 7.7% so far this year, much higher than the return on foreign currency bonds during the same period. The strategic corporation between the two banks is moving forward smoothly.  As at the end of June, the two banks cooperated in 72 projects in areas such as financing, investment banking, settlement and cash management, asset custody, and direct investments.  The Bank has not only realised USD9.4 million in business income, but was also able to enter into a number of new business areas including foreign structured commodity financing, project financing in mining, M&A financing in the international mining industry and carbon emission rights trading. Seng Heng Bank in Macau continued to develop its business after the acquisition by ICBC, and reported a 16% growth in profit despite the global economic downturn during the first half. On July 30, 2009, the Bank successfully merged Seng Heng Bank and the Bank's Macau branch to form ICBC (Macau). After the reorganisation, ICBC (Macau) has 14 branches, 3 subsidiaries and over 500 employees. It is Macau's largest locally incorporated bank with total assets of MOP47.1 billion, and its business performance, as measured by a number of core indicators, is also ranked the first among other locally incorporated banks in Macau. During the first half, the Bank also completed the acquisition of a 70% interest in the Bank of East Asia (Canada), and reorganized its investment banking business units in Hong Kong.  The Bank has also achieved increasing synergies between its wholly owned and controlled subsidiaries including ICBC Credit Suisse and ICBC Leasing, further strengthening the Bank's integrated service capabilities and profitability.

In addition, ICBC implemented effective cost control measures, and maintained its cost to income ratio at a relatively low level of 29.85% during the first half, enhancing the cost effectiveness of the Bank's business operations.

In addition to enhancing shareholder value, the Bank also strived to strengthen its core competitiveness to ensure sustainable development of its business. ICBC also accelerated its product and business innovation, with 320 new products launched during the first half for its individual, corporate and institutional customers. To meet the needs for the development of international and integrated businesses, ICBC has also made significant progress in the development of its Fourth Generation Technology Application System. Achievements have been made in key projects under the first phase of the plan, including integration of customer information, integration of credit card systems and restructuring of Internet banking applications. FOVA, the overseas branches information technology system developed by ICBC, has been launched at ICBC Indonesia and the Tokyo Branch, substantially enhancing the service capabilities for the Bank's overseas institutions. During the first half, ICBC's total deposits increased by RMB1,688.4 billion. The Bank's total deposits exceeded RMB10 trillion as at the end of June 2009 and became the bank with the highest customer deposits in the world.

Mr. Jiang Jianqing, Chairman of ICBC, said: "Although both the domestic and international financial sectors have shown various degrees of stabilisation, there are still obvious signs of instability, uncertainties and imbalances. The business environment is still difficult and challenging.  In the second half, ICBC will continue to proactively adapt to the changes and development in the economy and financial sector, and step up its efforts in risk control, reform and innovation, and structural adjustments. ICBC will explore new growth areas to maintain the sustainability of earnings growth. "