CCB has publicly released CCB Annual Report on it website (www.ccb.cn) and media, disclosing all information about CCB’s operational efficiency, finance and asset quality.  

CCB Annual Report 2003 shows, CCB’s Strategic objective is to work towards building a modern banking institution. In 2003, two major priorities were given to shareholding restructuring program and risk management, and progress was achieved through the gradual implementation of various reshuffle and development initiatives. As a result, steady growth was apparent across all lines of business, while asset quality and operational efficiency have again improved. Therefore, CCB has successfully reinforced the leading position in the marketplace.

Improved Operational Efficiency & Strengthened Capital Capacity

In 2003, CCB’s operating profit before provisions against loans and other assets amounted to RMB 44,684 million, an increase of RMB 13,946 million or 45.4% over the previous year. Profit before tax was RMB 450 million, a decrease of RMB 3,887 million over the previous year. The decrease was mainly due to the application of most of the year’s profit to write off the losses arising from non-performing legacy assets in accordance with the relevant regulations issued by the government. Furthermore, specific provisions of RMB 5,558 million were made in accordance with the relevant government policies.

While operating profit experienced considerable growth, all performance indicators have also improved. Return on assets based on profit before provisions reached 1.35%, up 0.30percentage points over the previous year. The cost to income ratio was 46.23%, down 6.93percentage points on a year-on-year basis.

In 2003, the State Council made a decision to launch a pilot shareholding reform at China Construction Bank. And on December 30 of the year, CCB received USD 22,500 million bailout and therefore improved the capital capacity considerably. At the end of the year, the owner’s equity was RMB 186,280 million, an increase of 73.7% or RMB 79,044 million.

Improved Asset Quality

In 2003, CCB disposed of RMB 85,045 million non-performing legacy assets, an increase of RMB 54,946 million over the previous year, of which, losses arising form disposal of loan assets amounted to RMB 56,898 million and losses arising from disposal of non-loan assets amounted to RMB 28,147 million. This large amount of non-performing legacy assets disposed within one fiscal year indicates CCB’s growing financial strength and the decision to improve the asset quality and control financial risks. In addition, the total amount of provisions against non-performing assets and other assets was RMB 21,997 million, an increase of 42.0% over RMB 15,495 million in the previous year. This has laid a solid foundation for CCB to accelerate the restructuring program and, ultimately, set up a shareholding structure.  

In 2003, a special project aimed at reducing the level of non-performing assets and resolving non-performing legacy assets was initiated. CCB has successfully disposed of non-performing assets totaling RMB 63,268 million, and recovered assets with a total value of RMB 49,485 million, of which RMB 42,442 million was in the form of cash. In total, CCB has written off RMB 56,898 million of non-performing loan.。

CCB strengthened the risk management and accelerated the resolution of non-performing assets. As a result, CCB has improved asset quality considerably with the enhanced operating efficiency and support from the government measures. By the end of 2003, in accordance with loans grading profile (pass, special mention non-performing, substandard, doubtful and loss), non-performing loans had decreased to 9.12%, down 6.05 percentage point. And the level stands at the leading position among domestic commercial banks.

Strong Growth across all Lines of Business

At the end of 2003, CCB’s total assets amounted to RMB 3,554.3 billion, up 15.3% over the previous year, of which the increase of loans to customers was 355.8 billion, an increase of 20.1%. The asset structure and credit portfolio were improve again. In terms of customer accounts, deposits maintained rapid growth. At the end of the year, customer accounts grew by 14.3% to RMB 2,971.3 billion.

During 2003, CCB continued to build on its competitive advantage within its traditional core market sectors by fostering key client relationships and strengthening its leading position in the medium and long-term lending market and real estate finance field. Corporate loans increased by RMB 260.7 billion or 17.4% and personal loans increased by RMB 95.1 billion or 35.4%. And all lines of intermediary services achieved sound growth. Net fee-based income from intermediary business was RMB 5,118 million, up 14.4% over the previous year.  

Following the success of CCB’s home mortgage brand, “Happy Home (乐得家) ”, the Bank launched “Happy Investor (乐当家)”, the wealth management brand, through which the personal banking customers  can enjoy a full range of personalized services to meet their needs. Meanwhile, CCB continued to introduce new and innovative products, developed new distribution and service channels, and improved its electronic remittance services and e-banking services. In August of the year, CCB successfully launched a credit card which is competitive with other international brands. The card issuing amount alone in the year reached 560,000 thousand.  

Enhanced Capabilities of Risk Management and Internal Control

Improving risk management and internal control capabilities is always a priority for state-owned commercial banks to enhance asset quality. The Annual Report 2003 shows, CCB has recognized the growing importance of risk management and has always been highly committed to evolve its risk management and internal control capabilities by introducing new approaches and practices. CCB, among its peers, takes the lead to build a comprehensive risk management system and launched the project pilot of risk management platform and early warning system. Meanwhile, CCB considerably improved its risk management and internal control capabilities by reorganizing management framework and strengthening accountability system. CCB accelerated the resolution of non-performing assets and achieved a significant reduction in the level of non-perfuming loans. As a result, CCB’s asset quality was improved dramatically. All these cannot be isolated from the enhanced risk management and internal control capabilities.

（Asset and Liability Management Department of China Construction Bank）