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Industrial And Commercial Bank Of China Ltd 01398

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Morningstar’s Analysis

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Earnings Growths of Large Banks Are Expected To Recover to Beyond the Pre-Pandemic Level in 2019

Iris Tan, CFA Senior Equity Analyst

Analyst Note

| Iris Tan, CFA |

While there was little surprise in most Chinese banks' first-quarter results, we saw increasing divergence in performance among banks. We believe top-line growth was the key differentiator and this will continue to be reflected in the future growth trend. Net interest margins, or NIMs, remained pressured while credit quality improved. We believe the credit cycle that has hampered Chinese banks’ earnings growth since 2014 is about to turn for the better, while we stay cautious in our credit quality assumptions primarily on short-term pressure from bank wealth management product, or WMP, transition. We expect NIMs to rebound, with a modest decline in full year credit cost from 2020. 

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Company Profile

Business Description

Headquartered in Beijing and founded in 1984, ICBC listed its shares in mainland China and Hong Kong in 2006. The bank is China's largest by asset scale and by share of lending and deposits. Central Huijin Investment (China's sovereign wealth fund manager) and China's Ministry of Finance are ICBC's two largest shareholders, each with a stake of around 35%. ICBC is headquartered in Beijing and operates 16,270 outlets. Among these outlets, 417 outlets are located in 42 countries and regions overseas. Corporate banking, retail banking, and wholesale banking accounted for 47%, 40%, and 13% of total revenue, respectively, and 55%, 31%, and 14% of profit before tax in 2019. Overseas banking and other business contributed 8% of total revenue and 9% of profit before tax in 2019.

Contact
3 Garden Road, 33rd Floor, ICBC Tower
Hong Kong, China, People's Republic of
T +852 25881188
Sector Financial Services
Industry Banks - Diversified
Most Recent Earnings Mar 31, 2021
Fiscal Year End Dec 31, 2021
Stock Type
Employees 439,787

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