ICBC has big plans for small com­pa­nies

Lender will widen mar­ket ac­cess with in­creased lend­ing to mi­cro en­ter­prises

China Daily European Weekly - - Business - By JIANG XUEQING jiangx­ue­qing@chi­

China’s largest State-owned com­mer­cial bank by as­sets will strengthen fi­nan­cial in­clu­sion, en­sur­ing more than one-third of its new cor­po­rate loans are is­sued to small and mi­cro en­ter­prises in the next three years, ac­cord­ing to the bank’s chair­man.

“We plan to dou­ble our loans re­lated to fi­nan­cial in­clu­sion in the next three years, with growth of over 30 per­cent a year on av­er­age,” said Yi Huiman, chair­man of In­dus­trial and Com­mer­cial Bank of China Ltd, at a news con­fer­ence on Sept 26.

As of the end of June, ICBC’s loan book cov­er­ing small and mi­cro en­ter­prises had in­creased by more than 17 per­cent from the be­gin­ning of the year, much higher than the av­er­age growth of other types of loans.

The bank charged small and mi­cro en­ter­prises an in­ter­est rate of 5.26 per­cent on av­er­age as of June 30, and the rate dropped fur­ther to 4.64 per­cent in Au­gust — much lower than the rates of lend­ing through other fi­nanc­ing chan­nels, ac­cord­ing to Yi.

A sur­vey con­ducted by ICBC in East China’s Zhe­jiang prov­ince found that for small and mi­cro en­ter­prises, while the av­er­age lend­ing rate is be­tween 5 and 6 per­cent at large banks, it has ex­ceeded 15 per­cent at emerg­ing fi­nan­cial in­sti­tu­tions and 20 per­cent at pri­vate lend­ing in­sti­tu­tions.

“Cur­rently, fi­nanc­ing chan­nels and the al­lo­ca­tion of fi­nan­cial re­sources are overdis­persed. Some so-called in­no­va­tive fi­nan­cial in­sti­tu­tions are seek­ing high re­turns by tak­ing high risks. It has raised the al­ready high costs of fi­nanc­ing among small and mi­cro en­ter­prises, although their fi­nanc­ing dif­fi­cul­ties seem to be mit­i­gated,” Yi said.

At the mo­ment the non­per­form­ing loan ra­tio is 2.75 per­cent among small and mi­cro en­ter­prises, 1.7 per­cent­age points higher than among large en­ter­prises. The non­per­form­ing loan ra­tio for small busi­nesses granted credit of less than 5 mil­lion yuan ($728,000; 632,000 eu­ros; £562,000) is even higher, mak­ing it dif­fi­cult for banks to cover the risks with re­turns, Yi said.

“The cost of risk is the big­gest cost of lend­ing to a small busi­ness … so en­hanc­ing com­mer­cial banks’ risk man­age­ment is the most im­por­tant part of de­vel­op­ing fi­nan­cial in­clu­sion,” he said.

For small and mi­cro en­ter­prises, ICBC said it will raise the pro­por­tion of credit-based loans with­out col­lat­eral to to­tal loans rea­son­ably, in­crease the sup­ply of medium- and long-term loans ac­cord­ing to the de­mands of small busi­nesses, and pro­vide com­pre­hen­sive fi­nan­cial ser­vices in­clud­ing fi­nan­cial con­sult­ing, in­vest­ment bank­ing and wealth man­age­ment, at dif­fer­ent phases of the busi­ness life cy­cle.

Gu Shu, pres­i­dent of ICBC, said the bank will step up sup­port for small busi­nesses, mainly via three on­line prod­ucts of­fered through an in­te­grated fi­nan­cial ser­vice plat­form.

The bank is us­ing big data an­a­lyt­ics to of­fer credit-based loans with­out col­lat­eral to star­tups, adopt­ing blockchain tech­nol­ogy to pro­vide sup­ply chain fi­nanc­ing to small com­pa­nies, in­clud­ing those at the end of the sup­ply chain, and grant­ing loans to small com­pa­nies that use real es­tate as col­lat­eral with the help of a data­base that an­a­lyzes real es­tate in­for­ma­tion and as­sesses the mar­ket value of prop­erty.

ICBC has es­tab­lished 230 cen­ters spe­cial­iz­ing in serving small and mi­cro en­ter­prises. It has served more than 1 mil­lion small busi­nesses, of­fer­ing a to­tal of more than 9 tril­lion yuan in loans.


ICBC has said it will in­crease sup­port for small busi­nesses, mostly through three on­line prod­ucts.

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