CCB goes all out for its clients
Updated: 2015-06-16 07:03
By Emma Dai in Hong Kong(HK Edition)
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China Construction Bank - one of the mainland's "Big Four" lenders - is cashing in on the mainland's "One Belt, One Road" initiative, saying that, without a wider global network, it could lose its clients and would be unable to help them in their overseas projects. Brent Lewin / Bloomberg |
China Construction Bank (CCB) Corp - one of the mainland's "Big Four" lenders - is to speed up its overseas expansion this year to support domestic clients' global footprints.
The bank also predicted that profit growth would be constrained by narrowing interest margins.
"This is still a good time for overseas expansion. The number of our overseas branches will increase from 22 to 30 by year end," Wang Hongzhang, the bank's chairman, said on Monday before the bank's annual general meeting in Hong Kong.
He said CCB would open five branches in Paris, Milan, Madrid, Johannesburg and Switzerland in the next two months.
"We are also expanding to Southeast and Central Asia, Eastern Europe and Africa. Apart from setting up our own channels, we are open to potential acquisitions."
CCB's expansion plan is in line with the mainland's "One Belt, One Road" strategy, an initiative to enhance infrastructure facilities and smooth trade flows from Africa to Europe, Wang said. Many companies answering the call of this strategy are the bank's major clients in domestic market. "Without a complete global network, we could lose them as well as the chance to play a part in their overseas projects," he said.
The Beijing-based bank has set up two wholesale funding teams to service mainland enterprises' overseas projects. "We are establishing new project examining centers in both Hong Kong and Luxembourg to improve approval efficiency and enhance risk control for overseas deals," Wang said.
The bank's Hong Kong-listed H shares declined 2.2 percent, or HK$0.17, to close at HK$7.59 on Monday, while the benchmark Hang Seng Index slipped 1.5 percent or 418.7 points to 26,861.8. Its Shanghai-listed A shares tumbled 3 percent to 6.9 yuan ($1.1).
"Profit growth of CCB as well as the entire Chinese mainland banking industry is under pressure due to deceleration of the country's economic growth," Wang said. "The first-quarter results largely reflect the real challenge we are facing, which is not likely to change dramatically towards yearend. (But) there will not be major turbulence or profit cliff."
"The economic downturn may force the People's Bank of China to cut interest rates again in the second half, which will lead to further pressure on our profit. But we expect the structural reform to make solid progress this year," Wang added.
CCB posted a net profit of 67 billion yuan for the first three months of this year - up 1.86 percent from a year ago. The lender's net profit for 2014 amounted to 227.8 billion yuan - up 6.14 percent from 2013. Meanwhile, its net interest margin edged down to 2.72 percent in the first quarter from 2.8 percent at the end of 2014.
(HK Edition 06/16/2015 page9)