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Upward Momentum: CCB Increased Profit and Growth in 2016

An Institutional Investor Sponsored Statement

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China Construction Bank Corporation (CCB) announced its Annual Operating Results for 2016 on March 29, which showed notable growth over 2015.

For highlights, CCB accumulated RMB20.96 trillion in total assets by year’s end (an increase of 14.25 percent over 2015) and delivered a net profit of RMB232,389 million (an increase of 1.53 percent). Net profit attributable to equity shareholders was up by 1.45 percent. The company’s board recommended a final cash dividend of RMB0.278 per share for fiscal year 2016.

Other core performance indicators saw upward momentum, as well. CCB’s total loans and advances to customers grew 12.13 percent over 2015 (reaching RMB11.76 trillion), and total customer deposits increased by 12.69 percent to RMB15.40 trillion. The bank’s 2016 return on average assets was 1.18 percent, while the return average equity was 15.44 percent. Net interest income declined by 8.73 percent, and CCB’s net interest margin (NIM) reached 2.20 percent.

The UK magazine The Banker ranked CCB second in the “Top 1,000 World Banks” in 2016, in terms of total tier-one capital (only the Industrial and Commercial Bank of China was ranked higher). The bank continued to lead its peers in market capitalization, with US$192.6 billion in December 2016—ranking fifth of all listed banks in the world. CCB posted a total capital adequacy ratio (CAR) of 14.94 percent, and its common equity tier-one ratio was 12.98 percent.

Currently ranked 22nd on Fortune’s Global 500 list, CCB credits its continued growth to staying focused on serving China’s real economy amid an increasingly complex environment. China’s sweeping economic development initiatives have added to that complexity, offering both challenges and opportunities.

The most prominent initiative is China’s “One Belt and One Road” plan, which seeks to forge trade agreements among approximately 60 countries in Asia and Europe. China’s “13th Five-year Plan,” launched in 2016, is also creating market shifts. The country also made heavy infrastructure investments in the Beijing-Tianjin-Hebei region and the Yangtze River Economic Belt. CCB loans to infrastructure sectors reached RMB2.9 trillion, increasing nearly 7 percent over 2015.

“CCB has remained committed to serving the real economy by proactively supporting structural reforms on the supply side and making significant progress in strategic transformation efforts through innovation-led reform,” said a statement by the bank. This improved risk management in 2016 to ensure optimal asset quality, the bank noted, while fully supporting China’s initiatives to expand its business capacity internationally.

The bank (Shanghai stock code: 601939, Hong Kong stock code: 939) also entered a critical phase of its own transformation program last year, intended to improve capabilities across its portfolio. As part of this program, CCB established new businesses in property insurance and cost engineering, which partly helped its total assets leap 39.14 percent and net profit jump 35.81 percent over 2015 performance.

As for fostering entrepreneurship, CCB loaned RMB1.44 billion to small and micro businesses in 2016. Domestic personal loans hit RMB4.34 trillion (accounting for nearly 69 percent of CCB’s total new loans), with residential mortgage loans increasing by more than 29 percent.

Finally, CCB increased its philanthropic contributions by more than 22 percent, with the company donating RMB74.42 million mostly to education, medical care, poverty assistance, disaster rescue and relief, and environmental protection measures. Among other accolades, CCB was named the “Best Bank in China 2016” by Euromoney, the “Best Consumer Bank in China 2016” and the “Best Bank for Liquidity Management in Asia-Pacific Region 2016” by Global Finance.