NPL Ratio Rises at ICBC Last Year; Provision Coverage Ratio Remains Below Regulatory Red Line
Song Yikang
/SOURCE : Yicai
NPL Ratio Rises at ICBC Last Year; Provision Coverage Ratio Remains Below Regulatory Red Line

(Yicai Global) March 31 -- Industrial and Commercial Bank of China Ltd [SHA:601398] (ICBC) reported a small increase in earnings last year, but its provision coverage ratio remained below the regulatory red line. This will not affect its future business development and credit extension, however, the bank said.

ICBC gained revenue of USD93 billion (CNY641,681 million) last year, down four percent from a year ago, per its annual report released yesterday. Net profit reached CNY279.1 billion, a yearly increase of 0.5. The non-performing loan ratio rose 0.12 percentage points to 1.62 percent from a year earlier.

The bank's provision coverage ratio was 137 percent, a drop of 19.7 percentage points from the year before. That indicator was once again below the 150 percent benchmark level after standing at 143 percent, as shown in its last year's interim report.

The ICBC has set aside sufficient provisions against potential soured credit, which is in line with regulatory and accounting requirements, said ICBC Chairman Yi Huiman at an earnings press conference, adding that the bank's provision coverage ratio is higher than its global peers. The bank's provision coverage ratio has stabilized and picked up slightly since last year's fourth quarter and is set to further rise this year, Yi noted.

Though regulators require that provision coverage ratio at commercial banks be above 150 percent, the annual dynamic range of that ratio may be adjusted appropriately based on macroeconomic changes, Gu Shu, president of ICBC, noted. The bank's current provision coverage ratio will not affect its future business development and credit extension, said Gu.

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Keywords: Earning ICBC , Non-Performing Loans Provision Coverage Ratio