Chillin' out till it needs to be funded
By far the largest China Huijin holding, the bank had almost 400,000 employees in 2009 and a domestic Corporate Credit of $480 bn or $3232 RMB. Its total assets of $1.6 Trillion or 11T RMB(Renminbi) Its Credit book is spread across 515 bn RMB (same as CNY or Chinese Yuan) in Personal Loans ( USD 77bn) and $42 billion to Real estate Developers (incl. $13bn in construction).
As the rest of the Big 4, ICBC spent time and resources in building partnerships with financial services majors to increase ‘green credit’ or access to SMEs and by extension local municipal bodies, that are facing the brunt of accelerated real estate bubble as their repayment ability is stretched. The green credit wave started in 2007 end after all the Big 4 went public in 2006 in Hong-Kong IPOs. With 190 million PB clients and 3 million Corp Customers ( 30000 SME customers) and 16000 branches, it may see to be undervalued at its current market value of RMB 1.1 T. However after reduction of NPLs from 20% a decade back, their current NPL ratio is still far high at nearly 5%
Since 2007 it has managed to diversify into global investment banking business lines with RMB 1.1 Trillion in Custody assets, and RMB 54bn in custody management annuities, increasing volumes in futures agency, bancassurance ( across 50+ insurance firms), precious metals and other trading businesses.
Its 2006 IPO amounted to $22 billion with $16 billion in H-Shares and $6 bn in S-Shares ( free float of 22%) and its 2009 savings balance was RMB 4 T or $586 bn. Annual Persona Banking sales now exceed RMB 1 T in “Elite” products and even 240 million credit cards as of 2008. Trading generated volumes of more than $1 T for ICBC alone (RMB 7.6T) with only $170 bn in FX trading
China’s Big $ have still not updated December 2009 results but prior 12 months results show ICBC sales at more than RMB 400 billion ($61 bn) and 130 bn in Net Income ( $20 billion )
With ICBC and the Big 4 stopping credit for Real Estate, on CBRC’s express instructions, the PE firms are increasingly the source for Property and Local Municipal companies to close current projects.
ICBC and others could invest in the Real estate funds as Limited Partners to control their exposure. Citibank has raised one such RMB 3400 bn fund with China Resources group to invest in China’s Shopping Malls. Also sovereign investments in Gold have topped off at 1054 Tonnes and CIC/China claims to hold Euro and Yen for FX stabilization apart from its large holdings of US Treasuries