By Wang Lan (Shanghai Start)
Updated: 2007-09-07 06:23

Industrial and Commercial Bank of China (ICBC), the country's biggest lender, yesterday said it will take advantage of the growing momentum in retail financial markets, and become the nation's largest retail bank.

Jiang Jianqing, chairman of ICBC, said the bank is seeking an all-round development strategy for the future, indicated by the product innovations tapping the booming domestic capital markets, including the stock, insurance and derivatives markets.

"We put it at the premium to broaden our investment products in the hope of meeting the increasing demand from investors," Jiang said in an exclusive interview with China Daily in Dalian.

He said ICBC would continue to attach importance to the development of the intermediate business in the future.

Income stemming from the intermediate service was the major contributor to the bank's profit growth in the first half of 2007. According to the interim report of ICBC, the take-in from intermediate business rose 89 percent from a year earlier to reach 14.9 billion yuan.

ICBC is also accelerating its overseas expansion to strengthen its competitive advantage in the global market. The latest acquisition made by ICBC is a 4.68 billion patacas deal for a 79.93 percent stake of Seng Heng Bank in Macao last month. Seng Heng Bank is Macao's third largest commercial bank in total assets.

"Compared with the traditional expansion model by increasing outlets, it is a better way for banks to develop business by mergers and acquisitions," Jiang said.

According to Jiang, 71 percent of the ICBC's overseas asset comes from mergers and acquisitions (M&As) and 87 percent of the bank's aggregate profit in the overseas market also stems from M&As.

Jiang also said that domestic banks should strive to improve risk management capabilities to deal with the market uncertainties arising from the piercing competition posed by foreign banks, since the all-round opening up of China's banking sector late last year.

Liu Xiaochang, a senior analyst at Huatai Securities, said: "More efforts should be made for domestic banks to diversify their earning sources in the next half of the year."

Qiu Zhicheng, an analyst at Haitong Securities, said: "Product innovation plays an increasing important role in leading to the sustainable development of the banking sector in China."

Economists and analysts said State-owned commercial banks should seek sustainable development to improve their competitive edge.

ICBC has 16,807 outlets on the Chinese mainland and 98 overseas branches and offices. It also has 1,326 correspondent banks around the world.

(Shanghai Start 09/07/2007 page1)