Industrial and Commercial Bank of China (Asia) Limited ratings action

Capital Intelligence (CI), the international credit rating agency, today announced that it has affirmed
Industrial and Commercial Bank (Asia) Limited’s or ICBC (Asia)’s foreign currency long-term and shortterm
ratings at BBB+ and A2 respectively. The ratings are underpinned by the Bank’s overall good loan
asset quality, favourable liquidity profile, solid capital adequacy and strong local franchise. ICBC (Asia)’s
financial strength rating is maintained at BBB. A ‘Stable’ outlook is appended to both foreign currency and
financial strength ratings. Based upon the high likelihood of financial support, in case of need, from both
ICBC (Asia)’s controlling shareholders and the Hong Kong Monetary Authority (HKMA), Hong Kong’s
official banking regulator, the Bank’s support rating remains unchanged at 2.
Benefitting from steady growth in both corporate and retail loans, ICBC (Asia)’s net interest income grew
in 2008, which was also aided by the widening of its interest differential led by a lower funding cost. In
2008 ICBC (Asia)’s non-interest income declined substantially due to turbulence in the global equity
markets and a difficult investment trading environment. The Bank has had a consistently good profitability
record, but its net profit fell and its return on average assets almost halved in 2008 due to a marked
increase in its loan-related provisions charge and a write down of its SIV investment portfolio.
While the Bank’s operating expenses rose in 2008 due to continued business expansion, growth in ICBC
(Asia)’s 2008 and 1H 2009 operating profit was satisfactory. The Bank’s increased impaired loans in 2008
and H1 2009 were largely related to the corporate, property and trade-related sectors in the context of
weak market conditions. Nevertheless, ICBC (Asia)’s overall loan asset quality remained sound. However,
the Bank’s impaired loan coverage ratio remained on the low side in comparison with the sector average.
ICBC (Asia)’s capital adequacy ratio was well maintained in 2008 and improved further in 1H 2009. The
Bank’s key liquidity ratios tightened slightly in 2008, but improved to more comfortable levels in H1
2009.
Incorporated in Hong Kong in 1964, ICBC (Asia) was the former Union Bank Limited, which underwent
several name and ownership changes during the period from 1973 to 2000 until the Chinese governmentowned
Industrial and Commercial Bank of China (ICBC) acquired a 75% stake in Bank in 2000 and
renamed it as today’s ICBC (Asia). ICBC (Asia) has grown through both organic expansion and merger
and acquisition activities including the acquisition of the retail and commercial banking assets of Fortis
Bank Asia Hong Kong from the Fortis Group in 2003. ICBC (Asia) acts as the flagship bank of ICBC
outside mainland China and offers a full range of retail and commercial banking services and products
including consumer loans, credit cards, wealth management services as well as SME and corporate
loans. It has also developed a niche acting as a lead manager in a variety of syndicated loan facilities.
At end 2008 ICBC (Asia) operated 43 branches, 9 “Elite Club” wealth management centres, 5
commercial business centres and 1 investment service centre in Hong Kong which were staffed by
1,454 personnel.