ICBC Commits to Ceding Profits to China’s Real Economy, New Renminbi Loans Hit Record High


China’s biggest lender has flagged its commitment to Beijing’s call for banks to cede profits to the real economy by reducing the cost of funds, while also posting a record increase in new renminbi lending since the start of the year.

Liao Lin (廖林), president of Industrial and Commercial Bank of China (ICBC), said that the big state-owned lender was continuing to “cede profits to the real economy,” in order to advance the Chinese government’s efforts to stabilise growth and expectations during the COVID-19 pandemic.

In the first quarter of 2022 the average interest rate for new company loans fell by 28 basis points, while overall financing costs for micro-and-small enterprises fell 60 basis points. Liao said that both these declines were greater that declines in the benchmark loan prime rate (LPR) for the corresponding period.

“[We are] actively guiding declines in the cost of funds, transferring liabilities-side profits to the real economy, and pragmatically reducing the operating burden for enterprises,” said Liao at a routine banking and insurance sector press conference held on 19 May.

Liao also highlighted growth in the pace of credit extension, with ICBC’s domestic renminbi loans increasing by more than 1 trillion yuan as of the end of April compared to the start of the year, over 200 billion yuan more than the increase seen for the same period last year, as well as marking a record high.

ICBC extended a total of 2.32 trillion company loans, for a year-on-year (YoY) increase of 330.9 billion yuan or 16.6%.

The big state-owned bank also underwrite nearly 500 billion yuan in bonds in the first four months of 2022, for a YoY increase of 34%, mainlining its leading market position.

Bond investment totalled 768 billion yuan, for net growth of 262.6 billion yuan.

As of the end of March ICBC’s. non-performing loan ratio was 1.42%, holding steady with the start of the year.