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Stock Profile: ICBC
Regional Equity Strategy Q4 2007
Income Statement (RMB m)
FY Dec 2005A 2006A 2007F 2008F
Net interest income 153,603 163,118 212,479 246,777
Non-interest income 18,017 18,520 32,020 47,382
Operating income 171,620 181,638 244,498 294,160
Operating expenses (81,585) (77,397) (99,812) (119,102)
Pre-provision profit 90,035 104,241 144,686 175,058
Prov. impairment loss (27,014) (32,189) (30,000) (33,500)
Operating profit 63,021 72,052 114,686 141,558
Associates 5 13 15 17
Exceptional 0 0 0 0
Profit before tax 63,026 72,065 114,701 141,575
Taxation & MI (25,471) (22,802) (33,399) (36,139)
Attributable profit 37,555 49,263 81,302 105,436
Balance Sheet (RMB mp
FY Dec 2005A 2006A 2007F 2008F
Cash & interbk. placements 686 910 1,135 1,215
Investments 2,306 2,871 3,508 3,988
Gross loans & advances 3,290 3,631 4,012 4,434
Less: Loan loss allowance (84) (97) (109) (123)
Fixed assets 93 82 91 100
Interests in Associates 0 0 0 0
Other assets 76 72 75 79
Total assets 6,456 7,509 8,784 9,765
Customer deposits 5,737 6,351 7,050 7,826
Interbank dep./borrowings 233 400 881 1,013
CD & wholesale deposits 6 6 7 8
Subordinated debt & LT debt 167 224 265 265
Others & Minorities 58 60 62 65
Shareholders' funds 256 466 519 588
Total liab. & Equity 6,456 7,509 8,784 9,765
Profitability & Efficiency Ratios (%) Financial Stability Measures (%)
FY Dec 2005A 2006A 2007F 2008F
FY Dec
2005A 2006A 2007F 2008F
Margins, costs & efficiency
Yield on earning assets 4.08 3.99 4.37 4.56
Avg cost of funds 1.50 1.70 1.70 1.70
Spread 2.57 2.30 2.68 2.87
Return on free funds 0.04 0.10 0.06 0.01
Net interest margin 2.61 2.40 2.74 2.88
Cost-to-income ratio 47.5 42.6 40.8 40.5
Cost-to-income ratio (adj.) 47.5 42.6 40.8 40.5
Employees (year end) ('000) 362 351 344 338
Effective tax rate 39.7 30.8 28.5 25.0
Business mix
Non-int. inc. / Operating income 10.5 10.2 13.1 16.1
Net fees / Operating income 6.1 9.0 13.2 16.5
Inv. gains / Operating income 2.1 (0.4) (0.0) (0.4)
Other non-int. inc. / Op. inc. 2.3 1.6 (0.1) (0.1)
Profitability
ROE (29.4) 13.6 16.5 19.0
Normalized ROE (%) (29.4) 13.6 16.5 19.0
ROA 0.65 0.71 1.00 1.14
Normalized ROA (%) 0.65 0.71 1.00 1.14
Valuation Graph : PE
Balance sheet structure
Loan-to-deposit ratio (Customer) 57.3 57.2 56.9 56.7
Gross loans / Total assets 51.0 48.4 45.7 45.4
Investments / Total assets 35.7 38.2 39.9 40.8
Individual loans / Gross loans 15.7 15.9 16.7 17.7
Corporate loans / Gross loans 81.2 81.0 80.3 79.5
Other loans / Gross loans 3.2 3.1 2.9 2.8
Customer dep. / Int. bearing liab. 93.4 91.0 85.9 85.9
Interbk dep, CD & Other / IBL 3.9 5.8 10.8 11.2
Subordinated & LT debt / IBL 2.7 3.2 3.2 2.9
Asset quality & provisions
Impaired loan / Total loans 4.7 3.8 3.2 3.0
Collect. loan allow./ Total loans n.a. n.a. n.a. n.a.
Individ. loan allow./ Impaired loans n.a. n.a. n.a. n.a.
Total loan allow./ Impaired loans 54.2 70.6 86.4 92.7
Loan impairment charges / Avg.
loans 0.8 0.9 0.8 0.8
Capital strength
Total CAR 9.9 14.1 13.2 13.2
Tier-1 ratio 8.1 12.2 11.7 11.9
Equity/Assets 4.0 6.2 5.9 6.0
Price & Price Relative to Index
(x)
31
29
27
25
23
21
19
17
15
Oct-06
Nov-06
Dec-06
Jan-07
Mar-07
Apr-07
May-07
Jun-07
Jul-07
Aug-07
Sep-07
HK$
5.5
5.0
170
160
150
4.5
140
4.0
130
120
3.5
110
3.0
100
90
2.5
80
Oct-06 Feb-07 May-07 Sep-07
ICBC (LHS)
Relative Index
Relative HSI (RHS)
75