Analysis of Annual Reports of Large State-owned Listed Banks in 2009

Large state-owned banks have always been the main body of China's banking financial institutions, playing the role of government financial leverage in supporting national economic development and economic construction. According to the data of China Banking Regulatory Commission, by the end of March 20 10, the total assets of domestic and foreign currencies of China's banking financial institutions were 84.3 trillion yuan, of which the total assets of large state-owned commercial banks were 42.9 trillion yuan, accounting for 50%. In terms of liabilities, the total domestic and foreign currency liabilities of banking financial institutions are 79.5 trillion yuan, of which the total liabilities of large state-owned commercial banks are 40.6 trillion yuan, also reaching 50%. At present, four large banks, ICBC, CCB, BOC and BOCOM, have been listed on the A-share market, and ABC is about to launch an IPO. By analyzing the annual reports of large state-owned listed banks, we can not only get a glimpse of the overall performance of China's banking industry, but also reflect the situation and trend of the national economy. Especially in the past 2009, in response to the global financial crisis, China adopted unconventional monetary policies and fiscal and taxation measures. In the process of supporting national macro-control, economic transformation and structural adjustment, large state-owned listed banks show some different characteristics and trends from previous years, so it is more necessary to track and interpret their annual reports.

Interpretation of 2009 Annual Reports of Large State-owned Listed Banks

At present, except the Agricultural Bank, the other four major state-owned banks are listed on A shares. Judging from the annual reports disclosed by various banks, the operation of large state-owned banks in 2009 has the following characteristics:

With the help of policy opportunities, banks actively carry out "price compensation by quantity", but the growth of operating income is not obvious. In response to the global financial crisis, China lowered interest rates several times at the end of 2008, which directly affected banks by narrowing the net interest margin. Although the narrowing of bank net interest margin has exerted great negative pressure on bank profits, the performance of large state-owned listed banks has still achieved growth in 2009. This is largely due to the credit supply in that year. In 2009, the central government implemented a moderately loose monetary policy and a proactive fiscal policy, and large state-owned banks quickly seized this opportunity to expand credit supply. The four listed banks have continuously increased their credit support for key construction projects, key industries and enterprises that meet the industrial policy orientation, and local government financing platforms, and vigorously developed the personal credit market. From the data point of view, in 2009, the new loans of the four major banks accounted for 33.7% of the national 9.58 trillion yuan of new loans, hoping to offset the impact of the decline in net interest margin with the help of volume premium. For example, in 2009, ICBC added RMB loans of 654.38+003.52 billion yuan, an increase of 24.2%, the largest loan increase in history. CCB loans increased by 1.02 trillion, while BOC adjusted its development strategy. In addition to continuing to emphasize overseas business, it began to attach importance to developing the domestic market as a breakthrough to narrow the operating gap with ICBC and CCB. In 2009, the total amount of new loans of China Bank was 1. 1.7 trillion yuan, an increase of nearly 50% compared with 2008, and it became the "loan champion" of the domestic banking industry in 2009, which shows its strategy of accelerating the leap-forward development of the domestic market.

After the second quarter of 2009, due to the expected limited credit scale in the future, large state-owned banks continued to implement the idea of seizing the scale and increased credit supply to make up for the price. Reflected in income, in 2009, large state-owned listed banks realized a total operating income of 889.773 billion yuan, up 0.86% year-on-year. This slightly conservative figure seems to indicate that the bank's strategy of making up the price by quantity has not been fully realized. In terms of operating income, ICBC continued to be the first, with operating income exceeding 300 billion yuan, a slight year-on-year decrease. Both CCB and BOC recorded revenues of more than 230 billion yuan, with CCB's revenue dropping slightly by 0. 16%, while BOC achieved an increase of10.6%. Bank of Communications is the most prominent one. Although its operating income is not far from the other three, it still achieved an increase of 5.58%, ranking first among the four banks.

Net profit continued to maintain rapid growth, which was largely due to the reversal of previously accrued provisions. According to the 2009 annual reports of four listed state-controlled banks, Industrial and Commercial Bank of China, China Construction Bank, Bank of China and Bank of Communications realized a total net profit of about 346.2 billion yuan, an increase of 17% over the total net profit in 2008. This achievement is much more beautiful than the growth figure of operating income. From the absolute ranking of net profit income, ICBC ranks first among the four major banks with 65.438+0294 billion yuan, CCB ranks second with 65.438+0068 billion yuan, BOC ranks third with 86.5438+00 billion yuan, and Bank of Communications ranks last. Its net profit in 2009 was only 306.5438+0 billion yuan. If the growth rate of net profit is considered, BOC ranks first, with a year-on-year growth rate of 27.2% in 2009. ICBC, CCB and Bank of Communications are 16.4%, 15.3% and 5.6% respectively. Obviously, regardless of the scale of net profit or the growth rate of net profit, Bank of Communications is in a low position among the four banks. On the one hand, there is a gap in its scale compared with other companies, on the other hand, it also stems from the substantial increase in the provision coverage ratio of Bank of Communications in 2009. The data shows that the provision coverage ratio of Bank of Communications at the end of 2008 was only 65,438+065,438+07.10%, which was at a low level among peers. After China Banking Regulatory Commission required major banks to reach 150%, Bank of Communications raised the provision coverage ratio to 15 1.05% in 2009. This action not only ensures the compliance of the operation, but also leads to the reduction of its net profit, and correspondingly affects the growth rate of net profit.

In 2009, the growth rate of net profit of large state-owned listed banks exceeded double digits except Bank of Communications, and the situation was good, but this was largely due to the correction of previous provisions. After the subprime mortgage crisis in the United States in 2008, affected by asset write-downs, banks have made huge provisions. However, when the global economy began to bottom out in 2009, the provisions previously made by banks rushed back and immediately became the driving force for net profit growth. For example, the provision of Bank of China in 2009 was 67% less than that in 2008. Excluding the provision factor, the profit before provision of Bank of China in 2009 was12,608.4 billion yuan, down 4% year-on-year. ICBC's profit before provision was 654.38+090.5 billion yuan, down 5.2% year-on-year. If we don't look at the provision factor and only look at the profit before provision, the figures of many banks are not good-looking. In short, the provision offset of big banks has become an important factor in the growth of net profit in 2009.

The ability to obtain profits has been continuously improved, and some major profit indicators have entered the ranks of advanced banks. The profitability of a bank represents its profitability. Generally speaking, return on assets and return on capital are used to reflect the profitability of a bank. Commercial banks whose return on assets exceeds 65,438+0% are usually defined as advanced banks internationally. Judging from the annual reports of several banks in 2009, CCB, ICBC and BOC all exceeded this standard, among which CCB ranked first with 1.24%. In addition, 0.94% of Bank of Communications is close to this standard. This shows that large state-owned listed banks have indeed shown some progress in the global banking market. From the perspective of return on capital, CCB ranks first with 20.87%, followed by ICBC with 20. 15%, and the figures are quite good. In addition, compared with ordinary listed companies, commercial banks often use an indicator to measure their profitability, which is the net interest margin (NIM) in credit business. Bank net interest margin refers to the ratio of bank net interest income to all interest-bearing assets of the bank, and its calculation formula is: net interest margin = (all interest income of the bank-all interest expenses of the bank)/deposit and loan interest margin of all interest-bearing assets. In a sense, the net interest margin of banks can be understood as the "operating profit margin" of other industries. In 2009, CCB ranked first with a net interest margin of 2.4 1%, and BOC ranked last with 2.04%. It is worth noting that the three indicators of China Construction Bank rank first among listed state-owned banks, which shows that the bank's profitability is strong. However, due to the influence of factors such as excess liquidity brought by the government's economic stimulus policy, the net interest margin of the four banks decreased in different degrees in 2009 compared with the same period, which may be a problem that needs to be seriously considered in the next operation of large state-owned banks.

The net interest income has achieved negative growth year-on-year, and the income from intermediary business has become an important source of stable income for banks. In 2009, according to the national policy tone of "maintaining growth" and the requirements of moderately loose monetary policy, large state-owned listed banks greatly increased their credit supply with the help of opportunities such as the central bank canceling credit scale control. But unfortunately, the huge credit supply is not reflected in the growth of net interest income. On the contrary, except for Bank of Communications, the increase of net interest income of the other three banks has declined to varying degrees. From the level of net interest income, ICBC's net interest income was 245.85438 billion yuan, down 6.5% from the previous year; CCB realized a net interest income of 265,438+065,438+85 million yuan, down 5.8% from the previous year; Only Bank of Communications maintained an increase of 1.4 1%. In 2009, the global financial crisis prompted China to implement a loose monetary policy, and large state-owned listed banks bore the brunt of the macro-control task. (Comment on this blog: China's large state-owned commercial banks undertake the political mission of national macroeconomic regulation and control, and are restricted by government instructions to some extent, rather than market-oriented operation under a completely free economic system. This is also the main reason why some market participants criticize large state-owned commercial banks. But on the other hand, we should also see many "privileges" owned by large state-owned commercial banks under the existing system. )。 As the benchmark interest rate of RMB and market interest rate are greatly lowered, the profit margin of banks mainly relying on deposit and loan spreads is greatly narrowed. However, the decline in net interest income of banks is not only the result of the narrowing of interest margin caused by the central bank's interest rate cut at the end of 2008, but also related to the decline in bargaining power of commercial banks caused by excess market liquidity in 2009. Judging from its proportion in operating income, net interest income still occupies an absolute position. For example, except for the non-interest income of Bank of China, which accounts for more than 30%, others such as ICBC and CCB all account for about 15%. This shows that net interest income still occupies the primary position in the income composition of the four major banks, and the business model and income structure of large state-owned listed banks are still relatively simple, mainly relying on interest income development, and the task of strategic transformation and business adjustment is still arduous.

In 2009, although the net interest income of large state-owned listed banks decreased, other non-interest income increased in all major banks. Whether it is the total proportion of operating income or compared with 2008, the data of several major banks are more eye-catching. ICBC's non-interest income increased by 36% compared with the previous year, while CCB increased by 29.85%, which just offset the decline in net interest income. In 2009, the income from intermediary business became an important weapon for large listed banks to stabilize their income. In view of the fact that the intermediary business does not consume the bank's own capital and is less disturbed by external factors, the performance growth in this area is of positive significance to the entire banking industry. From the perspective of increasing intermediate income, all large state-owned banks are actively promoting the progress of their own strategic transformation and business transformation, and increasing intermediate income while further adjusting their income structure. The annual reports of the four major state-owned listed banks show that in 2009, the four major banks maintained the rapid development of intermediary business and promoted the positive growth of net profit by means of financial service innovation. The net fee and commission income of the four major banks maintained double-digit growth, which made an important contribution to the steady growth of net profit. For example, relying on a strong customer base with 65,438+06,000 outlets, China Industrial and Commercial Bank actively built a diversified product structure, continuously and efficiently expanded its distribution network, and made great progress in business fields such as bank cards, investment banking, corporate finance and guarantee commitments. In 2009, ICBC's fee and commission income increased by more than 25% over the previous year, ranking second among the four major banks. On the other hand, CCB has made continuous efforts in engineering cost consultation, project fund supervision, fund consignment, bank card and asset custody, and realized a net fee and commission income of 48 billion yuan, an increase of 25% over 2008. BOC continues to give full play to its traditional advantages in international business and maintains a leading position in the fields of international settlement, settlement and sale of foreign exchange, precious metal sales and foreign currency financing. In 2009, the fee and commission income of China Bank was 46 billion yuan, up by 15. 19% year-on-year, and non-interest income accounted for 310.7%, ranking first among the four banks. With the help of its bank card and custody business, Bank of Communications achieved a fee and commission income of11400 million yuan in 2009, an increase of 28.99% over the previous year, ranking first among the four major banks.

The quality of assets continued to maintain a good trend, and the provision coverage ratio was greatly improved, which enhanced the ability to cope with risks. In 2009, the balance of non-performing loans of state-owned commercial banks including Agricultural Bank was 362.73 billion yuan, and the non-performing loan ratio was 1.8 1%, which was still a "double drop" compared with 2008. As far as the asset quality of the four state-owned listed banks is concerned, the non-performing loan ratio of the four banks was still well controlled in 2009, and both the balance and the non-performing loan ratio were successfully reduced. On the one hand, this is the reason for the substantial increase in the asset base, but it also shows that the overall asset quality of Ming Sijia Bank has remained relatively stable and the risk management level has been continuously improved. By the end of 2009, the balance of non-performing loans of the four major banks was 260.35 billion yuan, a year-on-year decrease of 13438+0%. The average NPL ratio of the four banks also dropped significantly from 2.27% in 2008 to 1.48%, and the NPL ratio was at a low level. Among them, ICBC 1.94% has the highest NPL ratio among several banks, while Bank of Communications 1.36% has the lowest NPL ratio. At the same time, however, in 2009, large listed banks in various countries actively lent money under the promotion of policies, which also caused the exposure of non-performing loans to varying degrees. Although several banks achieved a double decline in the balance and ratio of non-performing loans throughout the year, from the ring-on-ring data, BOC and ICBC increased slightly in the second half of the year compared with the first half, and some classified loans deteriorated slightly. For example, at the end of 2009, ICBC's concern loans and loss loans increased compared with the first half of the year, of which concern loans increased by 36.2 billion yuan and loss loans increased by 3.95 billion yuan. The above situation shows that it is still an important task for state-owned commercial banks to deal with operational risks.

In 2009, considering that huge loans may increase the exposure of non-performing assets, in order to achieve stable operation and meet the requirements of the regulatory authorities for the provision coverage ratio of large state-owned banks to reach 65,438+0.50%, the four major state-owned banks all raised the provision coverage ratio of non-performing loans to the standard level. Among them, the provision coverage ratio of CCB reached 175% in 2009, up 44% year-on-year, the highest among the four major banks. After the third quarter of 2009, CCB consciously slowed down the pace of credit supply and substantially increased the provision. This practice is the most advanced among the four banks, which shows the idea of CCB's more prudent and prudent operation. Among the four banks, China Bank and Bank of Communications have a provision coverage ratio of about 15 1%, which just meets the regulatory requirements of 150% and is at the critical point of just reaching the standard.

The asset adequacy ratio shows a downward trend, but the bottleneck of capital constraints on business is becoming increasingly obvious. In 2009, the capital adequacy ratio of large state-owned listed banks basically reached more than double digits, far exceeding the Basel Committee's standard of 8%. The core capital adequacy ratio is mostly around 9%, far exceeding the requirement of 4% in the New Capital Accord. However, after the third quarter of 2009, with the rapid increase in the lending volume of major banks, capital consumption is also rapid, resulting in a decline in the capital adequacy ratio of several major banks compared with 2008. At the end of 2009, the average capital adequacy ratio of the four state-owned listed banks was 1 1.8%. Among them, ICBC has the most abundant capital, with a capital adequacy ratio of 65,438+02.36% and a core capital adequacy ratio of 9.9%, which is 0.7 percentage points lower than that of 65,438+03.06% in 2008. Bank of Communications has a capital adequacy ratio of 12% and a core capital adequacy ratio of 8. 15%, ranking second among the four. CCB ranked third, with capital adequacy ratio of 65,438+065,438+0.7% and core capital adequacy ratio of 9.365,438+0%, which also decreased by 0.46 percentage points and 0.86 percentage points respectively compared with 2008. In 2009, China Bank, which ranked first among its peers in new RMB loans, faced the most obvious capital pressure. Its capital adequacy ratio 1 1. 14% was the lowest among the four banks, down 2.29 percentage points from the previous year, and its core capital adequacy ratio also dropped to 9.07%, ranking first among the four banks in terms of financing pressure. In 2009, the loan scale of Bank of China increased by 50.4%, ranking first among large state-owned listed banks. This not only made it "punished" by the directional issuance of central bank bills by the People's Bank of China, but also further widened the already insufficient capital gap of China Bank.

The difficulty of cost management has increased, and the continuous growth of bank net profit is facing challenges. The main index of cost control in banking industry is employee cost and cost-income ratio. In 2009, banks strengthened cost management one after another, and the four major state-owned listed banks continued to reduce various operating expenses and implemented strict cost control. However, in this context, the cost-income ratio of banks still increased in 2009. Among them, the cost-income ratio of ICBC increased by 3. 1 percentage point to 39%, and that of China Bank increased by 3.6 percentage points to 37%. The only exception is Bank of Communications, whose cost-income ratio has dropped by 0.39 percentage points, but its figure of 39.25% is still the first among the four banks. The rising cost-income ratio of large state-owned listed banks shows that the cost management of banks is becoming more and more difficult.

Compare the cost management between banks, and also look at the labor cost. This can be calculated by extracting two indicators: the staff cost and the number of employees in four banks. Personnel expenses refer to the expenses used by banks to pay employees' salaries, bonuses and various benefits, which can be reflected in the "personnel expenses" or "staff costs" under the "business and management expenses" of each bank's annual report. According to the 2009 annual report, among the staff expenses of large state-owned listed banks, the staff expenses of ICBC and CCB were 604,954.38 billion yuan and 5 1. 1.38 billion yuan, respectively, up by 13.6% and 9.6% over the previous year. The staff expenses of Bank of China and Bank of Communications were 45.474 billion yuan and 65.438+0.239438+0 billion yuan respectively, which also increased compared with the same period. If we consider the more comparable per capita staff cost, we can find that among the four state-owned listed banks, Bank of China has the highest per capita staff cost, reaching173,200 yuan, while ICBC ranks last with per capita staff cost155,200 yuan. The increase in the difficulty of cost management of large state-owned listed banks may come from rigid factors such as the increase in personnel, or it may be the reason for the adjustment of bank development stage and business model. But in the long run, it will erode the net profit, which is not conducive to improving the operational efficiency of banks and increasing shareholders' rights and interests.

Analysis on the Development of 20 10 Large State-owned Listed Banks

In 2009, under the circumstances of drastic changes at home and abroad, the four major state-owned listed banks still have unique performances in their operations. On the one hand, it is inseparable from national policy opportunities and China's economic growth. At the same time, it is also the inevitable result of the bank's own reasonable adjustment of business structure, vigorous development and innovation of intermediary business, active competition for the market and improvement of risk management level. Looking back on the past and looking forward to the future, after a brief interpretation of the annual reports of the four state-owned listed banks, we can continue to dig out something to guide our future work.

At present, under the background that the narrowing of spreads has become a general trend, large state-owned listed banks need to further promote business transformation and take intermediary business as an important starting point for future development. Judging from the published annual reports of the four major state-owned listed banks in 2009, in order to cope with the impact of the narrowing cycle of spreads, banks have taken many measures, such as adjusting asset allocation structure, vigorously developing intermediary business and increasing the proportion of non-interest income, and achieved certain results. The growth of intermediary business income has become an important factor to promote the growth of net profit of the four banks. With the increasing proportion of intermediary business in bank income, the development of intermediary business has become the focus of banking competition. Facing the trend of accelerating the marketization of interest rates and narrowing the net interest margin of banks in the future, vigorously developing intermediary business will become the direction for state-owned listed banks that still undertake macro-control obligations to improve their business structure. At present, the proportion of non-interest income of banks in major countries in the world is generally above 20%, and some banks even reach 70%. Non-interest income has become an extremely important factor in determining the overall income of banks. According to statistics, at present, the proportion of non-interest income in total bank income is 45% in the United States and Canada, 44% in European countries, and 28% in Asia-Pacific countries such as Australia. On the other hand, in China, although the intermediary business of state-owned banks has developed rapidly in recent years, there is still much room for improvement compared with developed countries. On the one hand, the proportion of intermediary business income of large state-owned listed banks in total income is only a dozen percentage points, far lower than that of the United States and Europe, and there are still many gaps compared with other mature Asian markets such as Japan and Singapore, and there is still broad room for development of intermediary business. On the other hand, the types of intermediary business of large state-owned listed banks are still relatively few and their business scope is narrow. At present, the intermediary business fields of several banks are generally concentrated in the traditional fields of settlement, remittance, payment, credit card, letter of credit, draft and other products, while the intermediary business with high technology content and high added value, such as consulting, investment and financing, derivative financial instrument trading, which occupy the main position in modern banking, is underdeveloped. Therefore, there is still a lot of work to be done to develop the intermediary business of large state-owned listed banks. For example, vigorously develop financial consultancy and private banking business, actively carry out asset securitization such as real estate, and accelerate the development of asset custody business. Large state-owned banks will be able to continuously enhance their core competitiveness and lay a good foundation for future development by vigorously looking for a breakthrough in the extraordinary development of intermediary business.

With the withdrawal of macroeconomic stimulus policies and the frequent adjustment of government policies, large state-owned listed banks may face the exposure of non-performing assets, so it is necessary to strengthen corresponding business management and risk response measures. In 2009, driven by the national economic stimulus policy, large state-owned listed banks adopted the idea of exchanging scale for income, competing for credit supply and seizing the market. Large-scale state-owned listed companies make a big fuss about the credit increment, and make a large-scale effort to make up the price by quantity, so as to maintain the rapid growth of profits and not fall behind in the industry. The scale of credit seems to be no longer a simple number, but a reflection of political consciousness. But after the uproar, the problem that needs to be faced is that some loans issued by banks in 2009 may become non-performing assets. For example, the risk of high credit loans and local financing platform loans may become a major issue that banks need to seriously consider. In 2009, the four major state-owned listed banks invested a large number of "TieGong Ji" fixed assets loans, especially in urban infrastructure construction, transportation, real estate development, land development reserve loans and other business areas, and the phenomenon of outstanding loans concentration is more common. This will easily lead to credit quality problems in the later period. In 2009, large banks at all levels invested a lot of loans in the real estate sector. In view of the serious asset price bubble in the domestic real estate market, the state implemented a package of control measures for the real estate industry in 20 10. It can be imagined that if these strict policies and regulations cause deep adjustment of real estate prices, large state-owned banks will face excessive exposure of credit risk, rebound pressure of non-performing assets ratio, and bank risk management will face great challenges. In addition, it should be noted that in the credit frenzy in 2009, several large banks signed a large number of credit support agreements with financing platforms of many local governments and industry authorities, and the credit risk existing in these government investment financing platforms may become a major hidden danger for the next operation of large state-owned listed banks. In order to solve these problems, large state-owned listed banks need to strengthen the risk management and control of corresponding loans, at the same time, implement a more prudent risk management framework internally, strengthen pre-loan review and post-loan tracking, closely track the comprehensive debt status and solvency of invested projects, and implement quarterly stress tests of real estate loans to control these risks in time and remove obstacles for their sustainable operation.

In the case of capital shortage caused by the expansion of business scale, large state-owned listed banks need to handle the relationship between capital replenishment and business development. Capital strength has always been one of the main signs to measure the comprehensive strength of banks. Economic growth will inevitably bring about the demand for funds, which indicates the expansion of bank loans, and banks will inevitably face capital replenishment after large-scale lending. For large state-owned listed banks, it is necessary to face the dilemma of declining capital adequacy ratio brought about by business expansion and accept the regulatory requirements of improving capital adequacy ratio. In 2009, CBRC raised the regulatory bottom line of capital adequacy ratio of large state-owned banks from 8% to 1 1%, and this figure was raised to 1 1.5% again in 20 10. This makes the capital shortage of major banks more and more prominent. At present, the refinancing plans of large state-owned listed banks have gradually become clear. Four listed large commercial banks have announced their refinancing plans, and many banks have adopted financing methods such as issuing convertible bonds, A shares and H shares. For example, ICBC and BOC both adopt the mode of "A-share convertible bonds +H-share allotment", Bank of Communications adopts the mode of "A+H-share allotment" and CCB adopts the mode of "A+H simultaneous allotment". 20 10 the State Council approved China Banking Regulatory Commission's related plan 20 10 on capital replenishment of large banks, requiring large state-owned commercial banks to adopt five principles: "raising A shares, restricting credit, solving more H shares, solving more innovative tools and increasing old shareholders". Judging from the published financing plans of China, ICBC and Shanghai Branch, the financial pressure of bank refinancing on the A-share market has been fully considered, such as striving for more H-share financing. Most A-shares are financed by private placement and private placement, which have little impact on the secondary market. In addition to external financing channels, several major banks may also replenish their capital by retaining profits. At present, the retained profits of large state-owned listed banks are about 654.38+078.58 billion yuan, which will provide follow-up support for supplementary capital. But generally speaking, the contradiction between the business development and capital shortage of large state-owned listed banks may become a normal state. This requires large state-owned listed banks to pay more attention to capital constraints, scientifically handle the relationship between capital quality, credit quality and sustainable development, control the irrational growth of credit, and prevent the capital gap from increasing due to excessive credit growth, so as to maintain their own sustainable operation.

(Author: Walter Postdoctoral Research Center)