The U.S sub-prime crisis breaking out in 2007 is a financial risk that has the widest and deepest influence ever since the 1997 Southeast Asian Financial Crisis. Once again people are shown how profound the influences of social, economic and financial risks in today’s world can be on different countries, different social strata and people. Confessedly, the crisis ten years ago took place in the most typical developing countries; this crisis, however was targeting at economically and financially advanced countries and regions, and even the first-rank banks, which have always looked risk control as a paramount task, were also faced with unprecedented puzzle from the crisis.
Risks are loathsome, whether in developed or developing country, particularly to financial institutions.
Aiming at the objectives set by the Board of Directors, Bank International of Ningbo in 2007 continued to follow a tight credit policy, energetically promoted short-term trade finance and intermediary business. As of December 31, 2007, its total assets reached USD268 million, deposits USD127 million and accumulative total credits (exclusive of inter-bank loans) USD169 million, including USD166 million trade finance. Deposits, credits and trade finance increased respectively 23.3%, 102.3% and 131.4% year on year. During this year, BIN realized USD8.669 million after-tax profit of, an increase of 46.4% from the previous year. Its year-end capital adequacy reached 161.6%, core capital adequacy 158.6%, and ratio of liquid asset balance to liquid liability balance 128.5%. Meanwhile, for a third consecutive year the bank kept a record of zero non-performing assets.
Looking back, we are very grateful that, in spite of the massive turbulences in the world financial market during this period, which have yielded unprecedented stress on credit and moral, Chinese economy, particularly that of southeastern coastal areas, has been healthy and booming, people and enterprises on this land are honest and practical, and our staff are professionally dedicated and ethically committed.
On behalf of the Board, I would like to thank from the bottom of my heart people of all circles for your consistent concern about BIN and update you on the bank’s various initiatives done in the past year:
I. Strengthen internal control system with risk management as first priority
Good operational performance cannot be separated from solid risk management. In 2007 BIN adhered to the principle of tight risk control set by the Board and conducted in-depth study and practice of internal control system build-up. We further reviewed various policy items and operational processes and realized fundamentally the objective of standardized management which gives top priority to the system. On the other hand, by availing of the good basis of our corporate culture, we organized vivified discussions and learning programs on risk management for all staff to let them better understand “the corporate attributes of the bank’s operational risks” and that “risk management itself is embedded in value development”, thus setting the stage for establishing the bank’s risk management principle, which is “based on capital constraint over risks, business growth aligned with risk control, and risk costs matched with return on risks”.
With enhancement of the internal control system and increase of employees’ risk awareness, our various businesses acquired rapid growth without incurring additional risk cost; various assets of the bank were safe and of good quality; and we met the objective management requirements laid down by the Board.
II. Provide differentiated and diversified financial services, focusing on local market and trade finance
In light of the economic development features of the Yangtze River Delta, particularly Ningbo, in provision of financial services in 2007, we continued to follow the marketing strategy centering on trade finance, matched with quick and flexible international settlement and remittance services for import and export. During the year, the entire organization accumulatively undertook for various types of enterprises USD166 million of trade finance, USD518 million of international settlement business under the category of import and export documents, and USD8.208 billion of general remittance transactions. According to statistics from a relevant authority, in Ningbo, where the bank is headquartered, BIN’s intra-city giro ranked the second in volume, next only to one Chinese bank.
Our flexible and quick trade finance and settlements provide for different enterprises not only the capital they are in urgent need but also the great thoughtfulness shown when such services are rendered. In order than our customers might timely place and effectively employ the capital, International Department, Loan Administration and Banking Service Department often worked overtime to accomplish various transactions under the category of notes and documents in the same day. That’s why an increasing number of enterprises and individuals have chosen BIN. When talking about the number, during the year our total clients almost doubled from the previous year’s 3804 to 7523, at a growth rate of 97.8%. What’s more, corporate clients also grew by 57.8%. Increase of the client base has provided a good foundation for the bank to improve its business size and profitability.
III. Use our strengths as complement to insufficiencies of other banks
In face of the crisis in world financial market, in 2007 various nations tightened their macro control. To guard against risks similar to the U.S sub-prime problem, in the latter half of 2007 Chinese government adopted various measures based on the economic conditions of the county to control the risks from excessively rapid and over-heated economic development. This led to a situation of relative shortage in liquid capital, credit restraint and difficulty in extending loans to clients.
In order to help enterprises with good prospects overcome capital shortages and facilitate the business of industry peers, BIN actively conducted inter-regional cooperation with other banks, on the basis of compliance, risk control and mutual benefit, which mainly included agency payment and forfeiting businesses under the category of import trade. The cooperation quite efficiently resolved the financing problem faced by quality clients in times of strict macro policy and provided a platform for the bank to conduct cross-regional services.
In 2007 transactions totaling USD111 million were accomplished through cooperation with other Chinese banks, which mainly included China Minsheng Banking, Bank of Communications, China Zhe Shang Bank, China CITIC Bank, and their subordinate organizations.
IV. Actively apply for Renmnbi business
For better serving our clients, in 2007 the bank continued to make actively preparations for starting the Renminbi business. Currently, the application and preparations have been finished and they have satisfied the general requirements of the supervisory authorities. The work mainly included business testing, perfection of the system functions, survey on market potential, operators training, product development and enhancement of the internal control system. We are looking forward to the permit for operating this business in the near future.
The early-stage Renminbi products are mainly intended to facilitate our clients’ trade finance and settlements and Renminbi financing. In the next stage we will consider developing Renminbi investment and derivative products. We will implement risk control in compliance with the requirements of the bank’s policy regarding overall risk so that domestic and foreign currency businesses can develop in a steady and coordinated manner.
V. Carry forward our corporate culture and advocate environmental protection to promote our national image
We should reinforce the merits of our corporate culture to carry forward the concept of environmental protection and sustainable development. In 2007, the bank organized colorful environment protection activities and advocated the basic concept of “Start from ourselves to protect the environment”, by taking into account our employee recruitment. From the management to general employees, we required everyone to recycle and reuse paper waste, follow garbage classification, not to use disposable chopsticks, and try whatever we can to reduce the use of plastic bags in our daily life. In addition, the bank also made reusable bags for the clients and the wide public by taking advantage of our publicity for environment protection.
To develop the awareness of environmental protection among children, the bank held the BIN Cup Children’s Environmental Protection Drawing Competition jointly with Jiangdong District Children’s Palace of Ningbo in November 2007. More than 60 children entered for the competition, with the youngest only at the age of three.
To promote the atmosphere for environment protection, BIN also put movable publicity boards bearing “Start from ourselves to save the globe”, “Start from ourselves to protect our homeland” and “Start from ourselves to beautify our homeland”, at conspicuous places of our business venues, reminding people that we should never forget our social responsibility to protect the environment while pursuing economic returns.
In 2007 we also paid great efforts to enhance our financial management, standardize our reimbursement system, extend our business venue, integrate archives and data, optimize system functions and promote employee training.
In retrospect, we are deeply aware that all our achievements rely heavily on the prosperity of Chinese economy, the trust of our clients, the dedication of our employees, and the great support of the regulatory authorities. Therefore, on behalf of the Board of BIN, I would avail myself of this opportunity to thank people from various circles for your consistent support and care for our bank, and wish for a more prosperous year for China. May the country flourish and people live in peace.
2008 is China’s Olympic Year. The great opportunities from the Games will add more brilliance to China’s economy. The world is watching us and we are expecting this moment. To realize this great aspiration, we will start from ourselves to do our jobs well. On the whole, we will make our operations more sustainable, products and services better aligned with market needs, and public image as being more committed to social responsibilities, thus making our due contributions to building a harmonious and sustainable social economy.