ABC Releases the 2015 Annual Results

On March 31, Agricultural Bank of China Limited (Stock code: SH:601288;HK:1288; hereinafter referred to as “ABC”) released its 2015 annual report. The report shows that ABC realized net profit of RMB180,774 million during the year, representing a year-on-year increase of 0.7%. Basic earnings per share are RMB0.55. In face of the grim situation of economic downturn and greater risks, ABC has always clung to the tone of steady development, focused on serving “Sannong” (agriculture, farmer and rural area) and the real economy and attached equal importance to operational transformation & restructuring and base consolidation & risk control, thereby realizing steady development of all businesses.
Business Scale Grew Steadily; CAR Further Increased. 
As at the end of 2015, total assets of ABC reached RMB17.79 trillion, up 11.4% from the end of last year. Total deposits and total loans amounted to RMB13.54 trillion and RMB8.91 trillion, up 8.0% and 10.0% from the end of last year, respectively. Return on average assets (ROAA) and return on average equity (ROAE) were 1.07% and 16.97%, respectively. Core tier-1 capital adequacy ratio (CAR), tier-1 CAR and CAR went up 1.15, 1.50 and 0.58 percentage points from the end of last year to 10.24%, 10.96% and 13.40%, respectively, indicating a remarkable enhancement in capital strength.
ABC Gave Play to its Advantages in Comprehensive Financial Services and Optimized its Credit Structure to Support the Real Economy.
ABC has released implementation opinions on supporting the “Belt and Road” Initiative”, the Yangtze Economic Belt Initiative and the Beijing-Tianjin-Hebei Integration Initiative, and formulated a series of policies and measures to support strategic emerging industries and the modern services. Priority was given to major industries, major customers and major projects; a group of key projects were supported such as the new capital airport; new loans for major projects accounted for 51% of its new corporate loans. Besides, it also increased supports for small and micro-sized enterprises of “grassroots entrepreneurship and mass innovation”. Loans extended to small and micro-sized enterprises increased by RMB113.3 billion, with a growth rate 1.6 percentage points higher than that of all loans. Moreover, emphasis was placed on financial services for improving people’s livelihood such as shanty area rebuilding and personal housing. Loans dedicated to rebuilding shanty areas went up by 64.3%, while personal housing loans had a growth rate 14.3 percentage points higher than that of all ABC’s loans. Capitalizing on new-type financing modes such as innovative PPP, industrial fund etc., ABC financed the real economy with RMB687.9 billion through debt issuance, wealth management products etc., and helped enterprises optimize the financing structure and lower financing costs.

ABC Improved the Quality of “Sannong” Financial Services and Consolidated its Competitive Edges in County Area Banking Services.
Clinging to its strategic position of serving “Sannong”, ABC is committed to continuously improving the quality of agro-related financial services. As at the end of 2015, its county area financial business realized pre-tax profits of RMB75,402 million. Total assets of the county area financial business grew by 9.2% from the end of last year to RMB6.38 trillion; total loans and advances granted went up 7.9% from the end of last year to RMB2.86 trillion; the balance of deposits was reported RMB5.80 trillion, up 9.2% as compared to the end of last year. Keeping pace with the modernized and large-scale development of agriculture, ABC stepped up financial services for leading enterprises and new-type agro-business operators, with its services covering 82% of national and 61% of provincial leading agro-enterprises. It has cumulatively supported 349,000 large-scale professional operators and family farms, and 81,000 specialized agro-cooperatives and their members. Loans granted to large-scale professional operators and family farms had a growth rate of 112%. Besides, financial services were rendered to support new-type urbanization and “Beautiful Counties” construction initiative, with the balance of county urbanization loans of RMB435.7 billion. In addition, ACB actively developed new-type farmland financial products based on farmland ownership, equity and returns on trust, and explored new agro-aid modes such as credit enhancement by government, interbank cooperation, “Internet Plus” etc., thereby consolidating and enhancing its competitive edges in county area financial services.
ACB Accelerated Building an Emerging Business System and Worked Hard on Nurturing New Growth Impetus.
In 2015, ABC increased efforts to develop investment, financing and trading businesses, and enhanced the flow-oriented operation, which helped it effectively deal with impacts brought by interest rate liberalization on the traditional profitability model. It steadily pushed the wealth management business to turn into a high-net-worth business, with the balance of wealth management business of about RMB1.58 trillion and the business income growing by 30%. It also actively and prudently advanced the internationalized development strategy, vigorously expanded the “going global” business and financial services dedicated to fee trade zones, and propelled comprehensive operation of cross-border services. As a result, its international settlement volume exceeded USD1 trillion, and total assets and net profit of overseas institutions grew by 28.6% and 16.2%, respectively. In addition, greater efforts were put into construction of comprehensive operation platforms for investment banking, funds, insurance and leasing businesses; subsidiaries were pushed towards specialized and featured development, and the four comprehensive subsidiaries were reported to have a 41.6% increase in net profit. ABC also speeded up innovative application of Internet finance, with financial transactions concluded through e-channels accounting for 93% and e-banking income growing by 21%.
ABC Strengthened Risk Control and Firmly Adhered to the Risk Limitation.
In face of the grim risk situation, ABC prioritized control of newly occurred NPLs (non-performing loans) and resolutely stuck to the risk limitation. The NPL control accountability was strictly implemented to prevent rapid growth of NPLs. Special rectification initiative was advanced in key risk fields; the list-based management and industry quota management were strengthened for industries with high pollution, high energy consumption and over-capacity; measures were adopted flexibly such as loan restructuring and refinancing to timely mitigate potential risks. Moreover, it employed innovative risk disposal means and a variety of measures such as liquidation, write-off and transfer through the market to make NPL disposal more effective. Through reducing existing NPLs and controlling new occurrence, ABC managed to maintain stable quality of assets, with outstanding NPLs of RMB212.9 billion and an NPL ratio of 2.39%. Risks were under control in overall. The provision coverage ratio was 189.43%, and the provision-to-loan ratio was 4.53% as at the end of the year, indicating its strong capability of risk compensation and loss absorption.
ABC Reinforced Outlet Management and Infrastructure Management, and Consolidated the Ground of Business Development.
In 2015, ABC worked hard to tap into its potential and increase efficiency so as to push the operational model to turn into “light-asset and light-capital”. The cost-to-income ratio was 33.28%, down 1.28 percentage points from the previous year. ABC stepped up efforts in outlet construction and infrastructure construction, focused on building a solid ground, insisted on legal and compliant operation, and built a firm managerial line of defense. Steady advancement was made in comprehensive renovation of counter-based business, promotion of “super-counter business”, the “Standardization, Normalization and Institutionalization Initiative” for the counter-based business and the “Flawless Accounting, Unquestionable Funds and Unbreakable Rules” management campaign. It has completed the construction of the new-generation core business system, resulting in a substantial enhancement of IT and big data support abilities.
In 2016, firmly upholding the new development concepts, ABC will actively assist with carrying out the structural supply-side reform, cutting industrial over-capacity, reducing unsold homes, conducting deleveraging, cutting into costs and strengthening weak links. It will also focus on improving financial services for “Sannong” and the real economy, in a bid for mutual prosperity with the real economy. Besides, aiming at building a multi-functional and integrated modern financial service group, ABC will deepen the institutional reform in an all-round manner, advance innovation of financial services, consolidate internal management and fight against risks and costs so as to increase its competitiveness and influences of all businesses.