A Term Paper on

Global/Multinational Banking: Industrial and Commercial Bank of China Limited

 Term Paper on Global/Multinational Banking: : Industrial and Commercial Bank of China
Limited (ICBC).

Course Title: IB-403: Foreign Exchange and International Banking

Group Name & Number: “Pinnacle” (18)

Prepared By:

Tamanna Tabassum (SN-030-009)

Mymona Ahmed Puspo (SN-030-036)

Jannatul Ferdous (SN-030-089)

Section: “B”

Department of International Business,

University of Dhaka. Prepared For:

Suborna Barua

Assistant Professor

Department of International Business,

University of Dhaka.

Date of Submission: 20th August, 2020

Abbreviations

ICBC Industrial and Commercial Bank of China

IPO Initail Public Offering
CAR Capital Adequacy Ratio
LCR Liqidity Coverage Ratio
ROA Retun on Average Asset
ROE Return on Average Equity
NIM Net Interest Margin
List of Figures

Figure 4.1.1: Capital Adequacy Ratio of ICBC Asia Ltd.

Figure 4.1.2: Average Liquidity Coverage Ratio of ICBC Asia Ltd.

Figure 4.1.3: Return on Average Assets of ICBC Asia Ltd.

Figure 4.1.4: Return on Average Common Equity of ICBC Asia Ltd.

Figure 4.1.5: Cost to Income of ICBC Asia Ltd.

Figure 4.1.6: Loans to Total Assets Ratio of ICBC Asia Ltd.

Figure 4.2.1: Return on Equity Ratio of ICBC Indonesia Ltd.

Figure 4.2.2: Return on Asset Ratio of ICBC Indonesia Ltd.

Figure 4.2.3: Capital Adequacy Ratio of ICBC Indonesia Ltd.

Figure 4.2.4: Loan to Deposit Ratio of ICBC Indonesia Ltd.

Figure 4.3.1: Capital Adequacy Ratio of ICBC Thailand Ltd.

Figure 4.3.2: Return on Average Equity Ratio of ICBC Thailand Ltd.

Figure 4.3.3: Return on Average Asset Ratio of ICBC Thailand Ltd.

Figure 4.4.1: Return on Average Equity Ratio of ICBC London Ltd.

Figure 4.4.2: Return on Average Asset Ratio of ICBC London Ltd.

Figure 4.4.3: Cost to Income of ICBC London Ltd.

Figure 4.5.1: Capital Adequacy Ratio of ICBC Macau Ltd.

Figure 4.5.2: Return on Average Equity Ratio of ICBC Macau Ltd.

Figure 4.5.3: Return on Total Asset Ratio of ICBC Macau Ltd.

Figure 4.6.1: Return on Average Total Asset Ratio of ICBC Ltd.

Figure 4.6.2: Return on Average Equity Ratio of ICBC Ltd.

Figure 4.6.3: Capital Adequacy Ratio of ICBC Ltd.

Figure 4.6.4: Cost to Income Ratio of ICBC Ltd.

Executive Summary:
International Commercial Bank of China is a large modern commercial bank with sufficient
capital, strict internal control, safe operation, and good service. It is one of the largest banks in
the world by its total assets, and a dynamic global bank in the emerging market, providing
comprehensive, high quality, efficient and modern financial services to its customers. It also
offers corporate, retail and investment banking services across the countries. Its main goal is to
achieve strong international competitiveness. The report includes historical discussion, and a
market analysis that includes countries in which ICBC is operating its banking activities. The
report also contains discussion about the types and nature of the functions, products and services
the bank delivers across the world. These products and services include international trade
financing, deposit, loan, remittance, clearing and settlement etc. Based on the market analysis a
consolidated financial and operating performance analysis is given. As the ratio analysis is the
most popular trend to evaluate a bank’s performance, we have used ratio analysis to measure the
overall financial and operating performance of the bank. In our report we have gone through the
bank’s financial statements for the last five years, and then analyzed and interpreted those
financial statements. Because of the importance of ratio analysis the investors, financial experts,
management executives and the bankers always rely on it to make important decisions . The
management team of any bank, investor and the government agencies are always concerned
about liquidity ratios and adequacy ratios of a bank which interprets the efficiency of a bank. The
overview of our analysis shows that the bank is operating proficiently under all circumstances.
Table of Contents
1. Industrial and Commercial Bank of China (ICBC):....................................................................1

1.1. The Historical Evolution of ICBC:...................................................................................................1

2. The Global coverage of the ICBC Bank:.....................................................................................2

2.1: Contributions of the markets:...........................................................................................................3

3. The types and nature of functions, product and services of ICBC delivers in different markets:
.........................................................................................................................................................4

3.1. ICBC New York:..............................................................................................................................4

3.2. ICBC Argentina:...............................................................................................................................5

3.3. ICBC Thailand:................................................................................................................................5

3.4. ICBC Spain:.....................................................................................................................................5

3.5. Other:................................................................................................................................................6

4. Consolidated financial and operating performance analysis:......................................................6

4.1: Industrial and Commercial Bank China (Asia Ltd.)..........................................................................6

4.1.1: Capital Adequacy Ratio (CAR):................................................................................................6

4.1.2: Liquidity Coverage Ratio (LCR):..............................................................................................7

4.1.3: Return on Average Assets (ROA):.............................................................................................8

4.1.4: Return on Common Equity Ratio:.............................................................................................9

4.1.5: Cost-to-Income Ratio:...............................................................................................................9

4.1.6: Loan to Total Assets Ratio:.....................................................................................................10

4.2: Industrial and Commercial Bank of China (Indonesia Ltd.)...........................................................11

4.2.1: Return on Equity Ratio:...........................................................................................................11

4.2.2: Return on Asset Ratio (ROA):.................................................................................................12

 4.2.3: Capital Adequacy Ratio (CAR):..............................................................................................12

4.2.4: The Loan to Deposit Ratio:......................................................................................................13

4.3: Industrial and Commercial Bank Thailand Ltd...............................................................................14

4.3.1: Capital Adequacy Ratio (CAR):..............................................................................................14

4.3.2: Return on Average Equity (ROE):...........................................................................................14

4.3.3: Return on Average Asset (ROA):............................................................................................15

4.4: Industrial and Commercial Bank China London Limited...............................................................15

4.4.1: Return on Average Equity:......................................................................................................15

4.4.2: Return on Average Asset (ROA):............................................................................................16

4.4.3: Cost to Income Ratio:..............................................................................................................16

4.5: Industrial and Commercial Bank China Macau Ltd........................................................................17

4.5.1: Capital Adequacy Ratio (CAR):..............................................................................................17

4.5.2: Return on Average Equity (ROE):...........................................................................................17

4.5.3: Return on Total Asset:.............................................................................................................18

4.6: Industrial and Commercial Bank of China Ltd. (Overall):..............................................................19

4.6.1: Return on Average Total Asset:...............................................................................................19

4.6.2: Return on Average Equity (ROE):...........................................................................................19

4.6.3: Capital Adequacy Ratio (CAR):..............................................................................................20

4.6.4: Cost of Income Ratio:..............................................................................................................20

Conclusion:....................................................................................................................................22

References:....................................................................................................................................23
1. Industrial and Commercial Bank of China (ICBC):
Industrial and Commercial Bank of China Limited is a multinational Chinese banking company
which was established on January 1, 1984. ICBC operates its business through different business
segments like personal banking, treasury banking, corporate banking etc. It is one of China's four
biggest state-owned commercial banks, alongside China Construction Bank, Bank of China and
Agricultural Bank of China. ICBC had 5.09 million corporate customers and 465 million retail
customers. In addition to its 17,000 domestic branches, it has branches in 41 countries.
Subsequently, ICBC was positioned at 1st in the banker's top 1000 World Banks ranking every
year from 2012 to 2019. Through its continuous endeavor and stable development, the Bank has
developed into the leading bank in the world. Besides, the bank has been consciously integrating
the social responsibilities with its operation, development strategy and gaining wide recognition
in the aspects of promoting inclusive finance, protecting environment and resources. 

1.1. The Historical Evolution of ICBC:

ICBC is formerly known as Union Bank of Hong Kong Limited and was established in Hong
Kong in 1964 and publicly listed in 1973. Aiming at international business, ICBC established
joint-venture banks with overseas organizations ever since its inception and an initial attempt in
cross-country operation.

1984-2005: 

ICBC was established on 1 January 1984. In 2011, ICBC opened a branch in Luxembourg which
became the European headquarters of the bank. Besides, ICBC (Europe) S.A. operates a network
covering branches in major European cities, which includes Paris, Brussels, Madrid, Barcelona,
Lisbon, Warsaw and Amsterdam. ICBC injected the corporate banking business of its Hong
Kong Branch into ICBC (Asia) in July 2001 and its operations are listed under the name ICBC
(Asia). On 10 October 2005, it purchased the Hong Kong subsidiary of Fortis Bank and
rebranded it under its own name. 

2006-2010:

On 27 October 2006, ICBC was listed on both the Hong Kong Stock Exchange and Shanghai
Stock Exchange. It was the world's largest IPO at that time valued at US$21.9 billion. According
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to Bloomberg, ICBC's market capitalization at the end of trade based on its Hong Kong shares
was US$156.3 billion which made its equity the world's fifth highest among banks. ICBC
completed the acquisition of Worldsec Assets Management Limited and renamed it to ICBC
Investment Management Company Limited on 31 August 2008. Afterwards it officially changed
the name to ICBC Asset Management Company Limited in October 2017.  ICBC performed its
privatization process which was henceforth withdrawn from listing on The Stock Exchange of
Hong Kong Limited and became a wholly-owned subsidiary of ICBC on 21 December 2010.

2011-2017:

ICBC opened a branch in Madrid, Spain on 24th January, 2011. On 18 august 2011, it started its
business in Pakistan. Then in November 2012, ICBC attained an 80% stake (valued at $600
million) of Standard Bank Argentina which was the largest operation of Chinese Bank in Latin
America. On 24 September 2014, ICBC Kuwait Branch officially opened in Kuwait City. In the
meanwhile, it is also the fourth branch of ICBC in the Middle East, following branches in Dubai,
Doha and Abu Dhabi. Further the Company strengthened its presence in the Middle East and
Europe by purchasing Turkey's TekstilBank and forming its ICBC Turkey subsidiary. On 17
February 2016, the Spanish Guardia Civil raided and investigated the offices of ICBC in Madrid
due to the suspicions of money laundering.

On 31 August 2018, ICBC joined its peers in reporting higher first-half profit and a steady bad
loan ratio. At the end of June, ICBC's net interest margin (NIM) was 2.30 per cent. On 30
August 2019, it posted a 4.7 per cent rise in first-half net profit. On 28 April 2020, (ICBC) said
that net profit grew 3.04 percent in the first quarter despite the impact of the coronavirus
pandemic.

2. The Global coverage of the ICBC Bank: 

The ICBC bank has enjoyed a glorious history of more than 20 years on its way to
internationalization with their remarkable achievements. ICBC has built a global service network
through mergers and acquisitions in both emerging and developed markets. Besides, by acquiring
shares of Standard Bank of South Africa, ICBC expanded its service indirectly to 20 African
countries. Since the acquisition of the public equity of Standard Bank, ICBC has become the first
Chinese bank purchasing institutions engaged in market transaction businesses like commodities,

2
capital and currency, foreign exchange, interest rate, credit and equity to customers worldwide.
In the process of internationalization, ICBC has always paid equal attention to the speed, scale,
quality and efficiency of development, committed to the sustainable development strategy, and
maintained steady achievements in transnational business. 

The names of international markets of ICBC Bank across the globe are given below:  

• Asia: ICBC Indonesia, ICBC (Asia), ICBC Macau ICBC Thailand etc.  
• Europe: London Branch, ICBC (Europe), ICBC Moscow, Spain Branch, ICBC
Turkey etc.
• North America: ICBC Canada, ICBC Mexico, ICBC (USA), New York Branch etc. 
• South America: ICBC (Argentina), ICBC Peru, ICBC Brazil etc.
• Oceania: Sydney Branch, ICBC New Zealand etc.

2.1: Contributions of the markets:

The ICBC’s overseas institutions have covered the regions that account for over 80% of China’s
FDI and export which makes ICBC a Chinese financial institution with the widest coverage. So,
as a market leader the international market has strengthened its position in domestic as well as
global market. Each market has its own contribution to achieve ICBC’s current position in the
market. For example:

• Asian Market: By establishing the Industrial and Commercial Bank of China

(Middle East) Ltd. through which ICBC started its international journey in Asian
market. A bank with a high capital adequacy ratio is considered to be above the
minimum requirements (8%) needed to suggest solvency. So, it can be one of the
indicators to prove the significance of the market on the bank. As the adequacy ratio
of the Asian market of ICBC is more than 8% so it shows that the contribution of this
market is higher as it has the largest number of branches.

• European Market: The capital adequacy ratio for the European market of ICBC
(Brussels branch) is 12.36%, which indicates its solvency as well as looking at the
market size in Europe. So, it can be said that the market is very potential and

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 diversified one which contribute about 35% of its revenues that emphasis its
contribution on the ICBC bank. 

• North American market: North America as a potential market has the capital
adequacy rate of 9.89%. So, the ICBC is trying to create its path in the North
American market and which can prove beneficial for the bank.

• South American Market: ICBC started its journey in South America through the
establishment of its Peru Branch. As a fastest growing economy in Latin America,
Peru has the potential to be the hub of trade between China and South America.
According to the annual report of ICBC Peru 2017, shows that the adequacy ratio was
15.14%. Besides this, Brazil is now one of the emerging economies where the trade
focus of China is currently shifting. So, it can be said that these branches have an
important impact on the ICBC bank in their near future

Besides these following markets, there are many more markets that contribute immensely to
ICBC’s current position in the market.

3. The types and nature of functions, product and services of ICBC delivers in different
markets:

3.1. ICBC New York:

The Bank (New York) gains access to wholesale banking business including corporate deposit,
corporate credit facilities, trade finance, project finance, treasury business and clearing. Products
provided by ICBC (U.S. market) are given below:

 Wholesale Banking: Wholesale banking services are delivered by the ICBC New York
Branch; it also includes taking deposits, lending, U.S. dollar clearing and remittance.
 Commercial Banking: Retail deposits, lending, settlement and remittance are the
commercial banking services that ICBC (USA NA) provides to both individual and
business clients.

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3.2. ICBC Argentina:
ICBC (Argentina) provides retail products and services to its clients. All the products and
services that enable providing financial services to clients are:

 Accounts: Clients can open savings accounts and check accounts. Check accounts
provide account overdraft, check opening etc.
 Deposits: Saving deposits are available in ARS and USD in subsidiary banks.
 Loans: The Bank provides personal loans, car loans to individual clients.
 Bank cards: Visa co-branded debit card as well as Visa and MasterCard co-branded
credit cards are issued by the bank.

3.3. ICBC Thailand:

ICBC (Thai) with a wide range of products and services tries to meet the needs of both
individual and corporate clients. They are:

 Deposit and Lending: The bank provides various types of deposits which include
normal, gold, high-speed saving account, current account, fixed deposit etc. All types of
credit facilities are provided to all types of business in order to support business
operations.
 Foreign Exchange and Trade Financing: For exporting and importing, the Bank offers
international trade financing facilities to all types of sectors through ICBC corresponding
baking network. The Bank offers currency exchange facilities for all major types of
currencies.
 Bank Cards: ICBC (Thai) gives different types of debit card and credit card facilities.

3.4. ICBC Spain:

ICBC (Spain) offers comprehensive, professional, flexible, diversified and effective banking
services. These are:

 Loan business: The Bank provides services related to domestic grantee and foreign loan
business, foreign grantee and domestic loan business. It also provides sight and forward
foreign exchange and other financial services.

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  Deposit in Multi-Currencies: Through this service, the clients can open a current
account with Euro, Dollar and Chinese Yuan which could meet their financial needs.
 Online Banking: Online banking is applicable for its corporate clients. By the help of the
online service, the client can check movement, payment, receipt, foreign exchange
trading, international transfer etc.
 Global Treasury management: The bank offers and supports the parent company in
remotely checking balance and providing information of the branches or subsidiaries at
any time and transferring funds with different degrees of authority.

3.5. Other:
Banking products and services offered by ICBC (Macau), (London) and (Hong Kong) includes:

 Deposit and Loan

 Trade finance and settlement
 Clearing
 Foreign exchange
 Investment
 Online banking
 Bank cards etc.

4. Consolidated financial and operating performance analysis:

4.1: Industrial and Commercial Bank China (Asia Ltd.)

4.1.1: Capital Adequacy Ratio (CAR):

Capital adequacy ratio measures a bank’s financial strength using its capital and assets against
risk-weighted assets. A bank with a high capital adequacy ratio is considered to meet its financial
obligation. Banks in Asia are required to meet the capital adequacy standard of 8%.

6
 Capital Adequacy Ratio (ICBC Asia Ltd.)
25.00%

Capital Adequacy Ratio

20.58%
19.75%
20.00%
16.57% 17.01% 16.74%
15.00%

Capital Adequacy Ratio

10.00%

5.00%

0.00%
2019 2018 2017 2016 2015

Year

Figure 4.1.1: Capital Adequacy Ratio of ICBC Asia Ltd.

Interpretation: ICBC (Asia) Ltd. has been able to maintain a healthy CAR ratio over the years.
However, it has started to increase from 2015. It increased from 16.74% to 20.58% which shows
a very healthy sign. It has been able to manage the ratio above the requirements specified by
Bank Asia. 

4.1.2: Liquidity Coverage Ratio (LCR):

The liquidity coverage ratio requires banks to hold enough high-quality liquid assets that can be
sold to fund banks and also used to assess a bank's liquidity by comparing a bank's total loans to
its total deposits for the same period.

Average Liquidity Coverage Ratio (ICBC Asia Ltd.)

Average Liquidity Coverage Ratio

250.00%

200.00% 192.16%
166.47%
150.00% 134.83% 128.80%
Average Liquidity Coverage
100.00% 93.97% Ratio

50.00%

0.00%
2019 2018 2017 2016 2015
Year

7
 Figure 4.1.2: Average Liquidity Coverage Ratio of ICBC Asia Ltd.

Interpretation: The ratio shows that the Average Liquidity Ratio of ICBC Asia has been
gradually increasing from 93.97% in 2015 to 192.16% in 2019, which indicates the bank’s
higher potential to convert assets easily and quickly into cash. 

4.1.3: Return on Average Assets (ROA):

Return on Average Assets can be defined as an indicator that is used to evaluate the profitability
of the assets of a firm. The higher the figure, the better is the utilization of the bank’s assets.
Return on Average Assets Ratio

Return on Average Assets Ratio (ICBC Asia Ltd.)

1.05%
1.02%
1.01%
1.00%
0.96%
0.95%

0.90% 0.90% Return on Average Assets

0.90%

0.85%

0.80%
2019 2018 2017 2016 2015
Year

Figure 4.1.3: Return on Average Assets of ICBC Asia Ltd.

Interpretation: The assets of the bank have not been better utilized as ROA has decreased from
1.02% to 0.90% from the year 2015 to 2019.

4.1.4: Return on Common Equity Ratio:

The return on common equity ratio measures how much money common shareholders receive
from a company compared with how much they invested originally and this measure only applies
to common shares.

8
 Return on Average Common Equity
Return on Average Common Equity Ratio (ICBC Asia Ltd.)
14.00%
11.83%
12.00%

9.56% 9.72% 9.82%

10.00%
8.44%
8.00%
Ratio
Return on Average Common
6.00% Equity

4.00%

2.00%

0.00%
2019 2018 2017 2016 2015

Year

Figure 4.1.4: Return on Average Common Equity of ICBC Asia Ltd.

Interpretation: Return on Average Common Equity Ratio of ICBC Asia Ltd. from 2016 to 2018
was almost average which drastically fell to 8.44% in 2019 which is the lowest in the five-year
scenario and a cause for concern. The ratio can be identified to be the highest in 2015 which was
11.83%. The reason behind this reduction is the decreased net profit in 2019.

4.1.5: Cost-to-Income Ratio:

The cost-to-income ratio measures the cost of running a business compared to its operating
income. The lower the cost-to-income ratio is, the more profitable the company should be. 

Cost to Income Ratio (ICBC Asia Ltd.)

25.00% 24.75%
24.50% 24.25%
Cost of Income Ratio

24.00%
23.44% 23.53%
23.50%

23.00%
Cost to Income
22.49%
22.50%

22.00%

21.50%

21.00%
2019 2018 2017 2016 2015

Year

Figure 4.1.5: Cost to Income of ICBC Asia Ltd.

9
Interpretation: The graph shows that the cost to income ratio has been fluctuating over the
years. The higher ratio was in 2019 at 24.75%, which indicates the lower profitability; and the
lower ratio was in 2016 at 22.49% which indicates the higher profitability of the bank.

4.1.6: Loan to Total Assets Ratio:

The loan to assets ratio measures the total loans outstanding as a percentage of total assets. 

Loans to Total Assets Ratio (ICBC Asia Ltd.)

Loans to Total Assests Ratio

54.00%
53.24%
52.88%
53.00% 52.54%

52.00%
51.20%
51.00%
Loans to Total Assets
50.00% 49.81%

49.00%

48.00%
2019 2018 2017 2016 2015

Year

Figure 4.1.6: Loans to Total Assets Ratio of ICBC Asia Ltd.

Interpretation: The ratio shows an unstable position of the bank in giving out loans. It had
decreased in 2017 and started to increase from 53.24% in 2018 and suddenly decreased in 2019
to 49.81%, which is the lowest ratio in the last five years. This decrease in the ratio indicates a
negative sign for the bank as it is earning less profits by decreasing lending.

10
4.2: Industrial and Commercial Bank of China (Indonesia Ltd.)

4.2.1: Return on Equity Ratio:

Return on Equity Ratio (ICBC Indonesia Ltd.)

18.00%
16.00%
Return on Equity Ratio

16.10%
14.00%
12.00% 12.40%
10.00%
8.00% Return on Equity Ratio
6.00%
6.20%
4.00%
2.00%
2.19%
1.48%
0.00%
2019 2018 2017 2016 2015

Year

Figure 4.2.1: Return on Equity Ratio of ICBC Indonesia Ltd.

Interpretation: ROE of ICBC Indonesia Ltd. was higher in 2015 (12.40%). The highest ratio is
in 2016 (16.10%) in the last five years. After that year, this ratio has started to decrease which
indicates a negative sign for this bank.

4.2.2: Return on Asset Ratio:

Return On Asset Ratio (ICBC Indonesia Ltd.)

Return on Asset Ratio

1.80%
1.60%
1.60%
1.40%
1.20%
1.20%
1.00%
0.80% Return On Asset Ratio
0.80%
0.60%
0.40% 0.28%
0.22%
0.20%
0.00%
2019 2018 2017 2016 2015
Year

Figure 4.2.2: Return on Asset Ratio of ICBC Indonesia Ltd.

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Interpretation: This figure shows that ROA has increased 1.20% to 1.60% from 2015 to 2016
and has reduced to 0.22% in 2019 which means that the assets of the bank have not been better
utilized.

4.2.3: Capital Adequacy Ratio:

Capital Adequency Ratio (ICBC Indonesia Ltd.)

25.00%
Capital Adequecy Ratio

21.64%
20.00%
17.70%
16.42% 15.90%
15.00% 14.40%

Capital Adequency Ratio

10.00%

5.00%

0.00%
2019 2018 2017 2016 2015

Year

Figure 4.2.3: Capital Adequacy Ratio of ICBC Indonesia Ltd.

Interpretation: ICBC (Indonesia) Ltd. has been able to maintain a healthy CAR over the years.
However, it has started to increase from 2015. It increased from 14.40% to 21.64% which shows
a very healthy sign. It has been able to manage the ratio above the requirements specified by
Bank Indonesia. 

4.2.4: The Loan to Deposit Ratio:

The loan-to-deposit ratio is used to assess a bank's liquidity by comparing a bank's total loans to
its total deposits for the same period.

12
 Loan to Deposit Ratio (ICBC Indonesia Ltd.)

Loan to Deposit Ratio

160.00%

140.00% 130.07% 135.20% 137.90%

119.33%
120.00%
105.90%
100.00%

80.00%
Loan to Deposit Ratio
60.00%

40.00%

20.00%

0.00%
2019 2018 2017 2016 2015

Year

Figure 4.2.4: Loan to Deposit Ratio of ICBC Indonesia Ltd.

Interpretation: LDR of ICBC (Indonesia) Ltd is much higher in 2015 (137.90%) and fell in
2017(105.90%), as the ratio (LDR) increased in 2019 (130.07%) it means that the bank may not
have enough liquidity to cover any unforeseen fund requirements.

4.3: Industrial and Commercial Bank Thailand Ltd.

4.3.1: Capital Adequacy Ratio:

Capital Adequacy Ratio (ICBC Thailand Ltd.)

18%
17.00% 16.90%
Capital Adequacy Ratio

16.55%

16%

14.74% Capi-
tal ad-
14%
equac
y ratio

12%
2019 2018 2017 2016

Year

Figure 4.3.1: Capital Adequacy Ratio of ICBC Thailand Ltd.

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Interpretation: ICBC (Thailand) Ltd. has been able to maintain a healthy CAR over the years. It
has increased from 16.55% to 17% which shows a very healthy sign.

4.3.2: Return on Average Equity Ratio:

Return on Average Equity Ratio (ICBC Thailand Ltd.)

Return on Average Equity Ratio

7.20%
7.00% 6.96%

6.80% 6.67%
6.63%
6.60%
6.40%
6.20% Return on Average Equity
5.98%
6.00%
5.80%
5.60%
5.40%
2019 2018 2017 2016

Year

Figure 4.3.2: Return on Average Equity Ratio of ICBC Thailand Ltd.

Interpretation: ROE of ICBC Thailand Ltd. was lower in 2016 (5.98%). The highest ratio is in
2019 (6.96%) in the last five years, which indicates a negative sign for this bank.

4.3.3: Return on Average Asset Ratio:

Return on Average Asset Ratio (ICBC Thailand Ltd.)

Return on Average Asset Ratio

1.00%
0.89% 0.88% 0.91%
0.90%
0.80%
0.70%
0.60%
0.50% Return on average asset
0.40% (ROA)
0.30%
0.20%
0.10%
0.08%
0.00%
2019 2018 2017 2016
Year

Figure 4.3.3: Return on Average Asset Ratio of ICBC Thailand Ltd.

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Interpretation: The assets of the bank have not been better utilized as ROA has increased
0.08% to 0.91% from 2016 to 2017 and has again dropped to 0.89% in 2019.

4.4: Industrial and Commercial Bank China London Limited

4.4.1: Return on Average Equity Ratio:

Return on Average Equity Ratio (ICBC London) Ltd.

Return on Average Equity Ratio

12.00%
10.38%
10.00%

8.00%
6.18% Re-
6.00% 5.59% 5.66% turn
on
4.00%
Av-
erage
Equ...
2.00%

0.00%
2018 2017 2016 2015
Year

Figure 4.4.1: Return on Average Equity Ratio of ICBC London Ltd.

Interpretation: ROE of ICBC London Ltd. was higher in 2015 (10.38%) which was the highest
ratio in the last five years. After that year, this ratio had decreased suddenly in 2016 and in 2018
it started to increase, which indicates a positive sign for this bank.

4.4.2: Return on Average Asset Ratio: 

Return on Average Asset Ratio (ICBC London) Ltd.

Return on Average Asset Ratio

1.20%
1.06%
1.00% 0.97%
0.87%
0.80% 0.73%

0.60% Return on Average Asset

Ratio
0.40%

0.20%

0.00%
2018 2017 2016 2015
Year

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 Figure 4.4.2: Return on Average Asset Ratio of ICBC London Ltd.

Interpretation:  ROA of ICBC London Ltd. has been fluctuating. Though the ratio has
drastically fallen in 2016 (0.97%) but it gradually increased in 2018 (1.06%), which indicates
that the bank has utilized their assets in a better way.

4.4.3: Cost to Income Ratio:

Cost to Income Ratio (ICBC London) Ltd.

40.00%
36.48%
Cost to Income Ratio

35.23%
35.00%

30.00% 28.86%
26.49%
25.00%

20.00%
Cost to
15.00% Income
Ratio
10.00%

5.00%

0.00%
2018 2017 2016 2015

Year

Figure 4.4.3: Cost to Income Ratio of ICBC London Ltd.

Interpretation: The graph shows that the cost to income ratio has been decreasing over the
years. The higher ratio was in 2015 at 36.48% which indicates the lower profitability; and the
lower ratio was in 2018 at 26.49% which indicates the higher profitability of the bank.

16
4.5: Industrial and Commercial Bank China Macau Ltd. 

4.5.1: Capital Adequacy Ratio:

Capital Adequacy Ratio Capital Adequacy Ratio (ICBC Macau) Ltd.

20.00%
18.11%
18.00%
16.22%
16.00% 15.28%
14.22%
14.00% Capital
12.00% Ade-
quacy
10.00% ratio
8.00%
6.00%
4.00%
2.00%
0.00%
2017 2016 2015 2014
Year

Figure 4.5.1: Capital Adequacy Ratio of ICBC Macau Ltd.

Interpretation: ICBC Macau Ltd. has been able to maintain a healthy CAR over the years.
However, it has started to increase since 2016. It declined from 18.11% to 16.22% which does
not show a very healthy sign. 

4.5.2: Return on Average Equity Ratio:

Return on Average Equity Ratio

Return on Average Equity Ratio (ICBC Macau) Ltd.

18.00%
15.65% 15.85%
16.00%
14.00% 12.63%
11.89%
12.00%
Return
10.00% on Av-
erage
8.00%
Equity
6.00%
4.00%
2.00%
0.00%
2017 2016 2015 2014
Year

Figure 4.5.2: Return on Average Equity Ratio of ICBC Macau Ltd.

Interpretation: ROE of ICBC Macau Ltd. from 2014 to 2017 drastically fell to 11.89% in 2017
which is the lowest in the four-year scenario and a cause for concern. The reason behind this
reduction is the decreased net profit in 2017.

17
4.5.3: Return on Total Asset:

Return on Total Asset Ratio (ICBC Macau Ltd.)

Return on Total Asset Ratio

1.20%
1.16%
1.15%
1.11%
1.10%
1.07%
Return on Total Asset
1.05%
1.02%

1.00%

0.95%
2017 2016 2015 2014
Year

Figure 4.5.3: Return on Total Asset Ratio of ICBC Macau Ltd.

 Interpretation: ROA decreased in 2014 and it was maximum in 2016. This may have occurred
because ICBC Macau Ltd. used more debt financing in 2016. In 2017, this ratio slightly
decreased from 1.16% to 1.07%.

4.6: Industrial and Commercial Bank of China Ltd. (Overall):

4.6.1: Return on Average Total Asset:

Return on Average Total Asset Ratio (ICBC Ltd.)

Return on Average Total Asset Ratio

1.40% 1.30%
1.20%
1.20% 1.11% 1.14%
1.08%
1.00%
Return
0.80%
on Av-
erage
0.60% Total
Asset
0.40%

0.20%

0.00%
2019 2018 2017 2016 2015
Year

Figure 4.6.1: Return on Average Total Asset Ratio of ICBC Ltd.

18
Interpretation: ROE ratio has been in a decreasing pattern. It was maximum in 2015. This may
have occurred because ICBC Ltd. used more debt financing in 2015. In 2019, this ratio slightly
decreased from 1.11% to 1.08%.

4.6.2: Return on Average Equity:

Return on Average Equity Ratio (ICBC Ltd.)

Return On Average Equity Ratio

18.00% 17.10%
16.00% 15.24%
13.79% 14.13%
14.00% 13.05%
12.00% Re-
10.00% turn
on
8.00% aver-
6.00% age
equity
4.00%
2.00%
0.00%
2019 2018 2017 2016 2015
Year

Figure 4.6.2: Return on Average Equity Ratio of ICBC Ltd.

Interpretation: ROE of ICBC Ltd. from 2015 to 2019 was gradually decreasing. In 2019 it was
13.05% which is the lowest in the five-year scenario and a cause for concern. The ratio can be
identified to be the highest in 2015 which was 17.10%. The reason behind this reduction was the
decreasing net profit in 2019.

19
4.6.3: Capital Adequacy Ratio:

Capital Adequacy Ratio (ICBC Ltd.)

Capital Adequacy Ratio

17.00% 16.77%

16.50%

16.00%

15.50% 15.39%
15.14% 15.22% Capital
15.00% Ade-
14.61% quacy
14.50%

14.00%

13.50%
2019 2018 2017 2016 2015
Year

Figure 4.6.3: Capital Adequacy Ratio of ICBC Ltd.

Interpretation: ICBC Ltd. has been able to maintain a fluctuating CAR over the years.
However, it has started to decrease from 2015 to 2017. It decreased from 15.22% to 15.14% and
has increased from 2018(15.39%) to 2019(16.77%) which shows a very healthy sign. 

4.6.4: Cost of Income Ratio:

Cost of Income Ratio (ICBC Ltd.)

Cost of Income Ratio

28.00%

27.50% 27.40%

27.00%
26.69%
26.45%
26.50%

26.00%
Cost of income ratio
25.79% 25.71%
25.50%

25.00%

24.50%
2019 2018 2017 2016 2015
Year

Figure 4.6.4: Cost to Income Ratio of ICBC Ltd.

Interpretation:  The graph shows that the cost to income ratio has been fluctuating over the
years. The higher ratio was in 2016 at 27.40%, which indicates the lower profitability; and the
lower ratio was in 2018 at 25.71% which indicates the higher profitability of the bank. The bank
should properly manage their profitability.

20
Conclusion:

In this report, we have chosen International Commercial Bank of China (ICBC) to acquire real-
life knowledge about the organization, management, types and nature of products and services,
financial and operating performance, and the evaluation of an internationalized bank. ICBC was

21
ranked the largest bank in the world by its total assets. ICBC has set up 426 institutions in 47
countries and regions. Each market has its own contributions to ICBC’s overall development. It
also provides comprehensive, high quality, efficient and modern financial services and offers all-
round, high-quality global market products and services in all countries. However, the bank has
remained profitable since its inception. ICBC faces some challenges like fluctuating return on
average asset ratios, return on average equity ratio, capital adequacy ratio etc. Eventually, this
challenge has affected the bank in some ways. Nonetheless, the bank has all the capabilities to
handle these challenges. They need to pay attention to their limitations and take measures to
improve their current condition. Its strong exposure in different banking areas has made the bank
trustworthy among its clients. Therefore, focusing on the areas that the bank should improve will
eventually help it in achieving continuous growth.

References:

22
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24
 http://www.icbc.co.id/ICBC/%E6%B5%B7%E5%A4%96%E5%88%86%E8%A1%8C/
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27. Saloni Shukla, P. (Jul 02, 2020). Chinese banks go slow on large loans: The Economic
Times.

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