China Construction Bank Corporation (“CCB” or “the Bank”, stock code: 939) announced its operational performance for the first three quarters of 2012 on 28 October. So far this year, by pursuing scientific development and insisting on operating prudently, the Bank was able to achieve steady development in all its business segments, while its financials and asset quality remained stable. In the first three quarters, its net profit was up 13.87% from the same period last year to RMB158.519 billion (the data herein are reported in accordance with International Financial Reporting Standards on a consolidated basis).

Steady growth in financial performance

During the first three quarters, all of CCB’s business segments operated steadily while asset quality was further reinforced and the pay-off of its structural adjustments was considerable. As of the end of September 2012, the Bank had RMB13.30 trillion in total assets, which increased by 8.26% from the end of last year. Compared to last year end, total loans and advances to customers were up 11.85% to RMB7.27 trillion, while deposits were up 10.72% to RMB11.06 trillion. The Bank’s loan-to-deposit ratio was 65.70%. Its capital adequacy ratio was further raised to 13.87% and its core capital adequacy ratio was 11.35%, representing increases of 0.19 and 0.38 percentage points from the end of last year. Annualised returns on average assets and annualised returns on average equity were maintained at 1.65% and 24.18% respectively. During the period, the net interest spread was 2.57% and the net interest margin was 2.74%, up respectively by 0.01 and 0.06 percentage points from the same period last year. Due to factors such as a slowdown in the growth of the domestic economy, the Bank realised a net income of RMB69.921 billion from its intermediary businesses in the first three quarters of 2012, an increase of 1.64% from the corresponding period last year.

Pay-off from structural adjustments considerable

The third-quarter report shows that, in the first three quarters, CCB’s total loans and advances to customers rose 11.85% to RMB769.564 billion. These new loans were mainly directed towards infrastructure, personal mortgages, small and micro enterprises and agriculture-related projects, which are related to livelihood sectors or areas in which CCB has a traditional edge.

In the period, CCB’s infrastructure loans and housing loans grew steadily. As of the end of September, infrastructure loans grew RMB146.5 billion from the beginning of the year, representing a growth rate of 8.30%. On the other hand, the personal housing loan business of the Bank continued to meet consumer demand for buying homes for their own use. In this area, both CCB’s balance of loans at RMB1.47 trillion and new loans at RMB160.9 billion ranked first among industry peers.

At the same time, the balance of the Bank’s loans to small and micro enterprises was RMB712.2 billion, which represented an increase of RMB80.3 billion from last year end and a growth rate of 12.7%. The balance of agriculture-related loans increased 15.20% to RMB1,219.6 billion. For loans to affordable housing projects, the balance was RMB48.1 billion, with new balance totalling RMB22.4 billion, a growth rate of 87%. For personal provident fund loans, the balance was RMB724.6 billion, with new balance totalling RMB108.4 billion, a growth rate of 17.60%. Furthermore, RMB9.4 billion were extended to 51,200 low to middle-income households in the form of affordable housing loans.

Since the beginning of this year, CCB redoubled efforts to study market risk and key industries that the Bank is exposed to and strengthened the Bank’s risk management and control capabilities. By actively cleaning up on loans to local government financing vehicles, CCB continued to improve its loan structure. As of the end of September, for these types of loans, those with full cash flow coverage accounted for as much as 91.70% of inventory, an increase of 6.00 percentage points from last year end. Meanwhile, by guaranteeing loans in some industries and suppressing loans in others, the Bank intensified efforts to optimize the quality of its loan pool. The Bank also implemented more stringent management processes to control credit risk, which resulted in reducing or withdrawing credit for industries with overcapacity such as steel, cement and related industries. As a result, decreases in the proportion of loans to industries justifying restrained support and to industries warranting gradual credit suppression was achieved. CCB’s third-quarter report revealed that, as of September end, its non-performing loan ratio dropped 0.09 percentage points from the end of 2011 to 1.00%, while the impairment loss allowance to non-performing loan ratio rose 21.48 percentage points to 262.92%.

Good momentum in emerging businesses

While maintaining stable financial benefits and asset quality, CCB has also been focusing considerable resources to develop the Bank’s emerging businesses in order to enhance its market competitiveness, resulting in satisfactory growth in several emerging business segments. There has been rapid development in the credit card business in the first three quarters of this year, with 38.47 million cards issued cumulatively and 6.22 million cards newly issued. Income from this business grew 74% to RMB9.81 billion. Meanwhile, the number of cash management accounts increased by 265,900 and the number of pension fund customers increased by 2,976 from the beginning of the year. In investment banking, CCB ranked first in the industry in terms of the amounts of debt financing instruments and short-term financing bills underwritten.

In the period, CCB’s e-banking business developed so rapidly that a number of related indices ranked top in the industry. The ratio of e-banking to over-the-counter transaction volumes rose 37 percentage points from last year end to 244%; the number of personal internet banking accounts increased by 26.60 million to 111 million; and the number of mobile-phone banking accounts increased by 28.46 million to 75.41 million.