Industrial Bank Co., Ltd. is one of China's largest commercial banks, with outstanding loans of $71.8 billion (¥489.9 billion) as of December 31, 2008. Industrial Bank offers personal, corporate, and institutional clients an array of financial services, ranging from checking accounts and credit cards to underwriting services and bond issuance.
Despite global economic turbulence caused by the 2008 financial crisis, Industrial Bank increased its net revenue and net income by 34.7% and 32.6%, respectively. Industrial Bank has benefited both from the relative strength of the Chinese economy and from moves by the Chinese government to protect the domestic economy. In 2008, the bank's ratio of nonperforming loans to total loans fell to 0.83%; for reference, Citigroup's nonperforming loan ratio more than doubled from 1.15% to 3.21% during the same time period.
Founded in 1988, Industrial Bank Co., Ltd. originally operated primarily in Fujian Province in the southeastern part of China. Since then, Industrial Bank (often abbreviated as IB) has expanded across the country, establishing 40 branches and over 440 sub-branches in main Chinese cities including Beijing, Shanghai, and Shenzhen. Though IB itself does not operate outside the Chinese market, it uses its professional relationships with foreign banks to give domestic clients access to financial services in other countries.
|Annual Data, millions USD||2005||2006||2007||2008|
|Net Interest Income||$1,135.8||$1,667.6||$2,742.4||$3,771.1|
|Fee & Commission Income||$29.0||$54.3||$199.7||$377.8|
|Loan Loss Provision||$193.0||$301.3||$220.9||$491.9|
|Nonperforming Loan Ratio||2.33%||1.53%||1.15%||0.83%|
|Gross revenue by source||Percentage of gross revenue||Year-on-year change|
|Income from Central Bank||3.0%||58.6%|
|Income from other banks||2.6%||146.4%|
|Reverse repurchase agreements||12.4%||70.5%|
|Fee & commission income||5.2%||59.9%|
In the face of deteriorating conditions in the global economy throughout 2008 and into 2009, the Chinese government implemented its own policies aimed at stimulating its economy and protecting domestic firms from the negative effects of the crisis. On May 31, 2009, the country's State Council issued a notice lowering the minimum capital proportions for fixed-asset investment projects; essentially, businesses looking to invest in certain industries won't have to put up as much cash upfront, allowing them to borrow a larger percentage of the total cost. Policies such as this are intended to spur local governments to invest in the development of new areas of the manufacturing sector, which is the largest source of the country's GDP. By allowing businesses and local governments to borrow more, these policies also help Industrial Bank and other business lenders who benefit from the increase in new loans.
Despite the effects of the 2008 financial crisis on many of the world's economies, Industrial Bank's net income for the year rose by nearly 33% from 2007 levels. In the same year, the total value of IB's loans and deposits grew by 24.8% and 25%, respectively, while its ratio of nonperforming loans actually decreased. IB operates solely in China, conducting its limited international business indirectly through partnerships with foreign firms. As such, IBC's performance is determined primarily by conditions in the domestic market. The 2008 global economic downturn affected China to a much lesser extent than many other countries. Despite a decline from its real GDP growth rate of 13% in 2007, China's GDP still grew by a healthy 9.8% in 2008 in spite of slowing export growth. On June 1, 2009, the China Federation of Logistics & Purchasing reported that its Purchasing Managers Index (which measures spending in the manufacturing sector as a reflection of the overall economy) for the month of May was 53.1, indicating continued growth in backbone of the Chinese economy.
Since Industrial Bank Co. operates solely in Chinese markets, its competitors include other commercials banks within the country.
|2008 Financial Data (USD)||Industrial Bank Co.||Bank of China||Industrial and Commercial Bank of China||Shanghai Pudong Development Bank||China Construction Bank|
|Net Revenue (mm)||$4,278.2||$32,955.6||$44,660.8||$4,975.9||$38,837.2|
|Net Income (mm)||$1,639.2||$9,487.2||$16,013.9||$1,802.0||$13,338.3|
|Total Assets (bn)||$147.0||$1,000.9||$1,404.8||$188.5||$1,087.8|
|Total Liabilities (bn)||$139.9||$930.3||$1,317.5||$182.5||$1,020.5|
|NPL Ratio (%)||0.83%||2.65%||2.29%||1.21%||2.21%|