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ABC Releases the 2020 Annual Results

On March 30, 2021, Agricultural Bank of China (“ABC” or “the Bank”; Stock Code SH: 601288; HK: 1288) released its annual performance results of 2020. The announcement shows that in 2020, ABC adhered to the general principle of pursuing progress while ensuring stability, made coordinated efforts in poverty alleviation, pandemic prevention and control, serving the real economy as well as its operation and management, successfully completed its business objectives and advanced high-quality development. ABC came at 35th place in the Fortune Global 500 list, rising for two years in a row, and 3rd place in the The Banker’s Top 1000 World Banks list in terms of tier 1 capital.

· Maintaining sound operation and stable asset quality

As of the end of 2020, ABC’s total assets reached RMB27.21 trillion, increasing by 9.4%. Revenue of the year was RMB659.33 billion, an increase of 4.8%. Net profit stood at RMB216.40 billion, an increase of 1.6%. The balance of loans and advances was RMB15.17 trillion, a growth of 13.5%. Deposit balance reached RMB20.37 trillion, an increase of 8.1%. The balance of NPLs was RMB237.11 billion and NPL ratio 1.57%. The provision coverage ratio was 260.64%, retaining a relatively high level of risk compensation capacity. ABC successfully issued capital bonds of RMB160 billion, raising its capital adequacy ratio to 16.59%, an increase of 0.46 percentage points over the end of the previous year. The cost-to-income ratio stood at 29.23%, a decrease of 1.26 percentage points over the end of the previous year.

· Achieving notable progress in Sannong and poverty alleviation by stepping up policy support and resource allocation

First, stepping up loan offering to key areas of Sannong in counties. To better shoulder its responsibility to serve Sannong, ABC increased county-level loans by RMB752.5 billion throughout the year with its balance standing at RMB5.31 trillion, with a focus on key areas of rural revitalization such as food security, farmland irrigation and water conservancy, and bolstering weak spots in rural infrastructure. ABC continuously provided quality financial services for spring farming preparation, stable production and supply of agricultural products, and hog production. Loans to key enterprises aiming at ensuring stable production and supply of agricultural products increased by 38.6%. The balance of loans to new types of agricultural businesses such as leading industrialized agricultural enterprises, family farms and specialized farmer cooperatives stood at RMB371.2 billion, an increase of RMB75.3 billion from the end of last year. ABC made full use of fintech tools such as the internet and big data to serve Sannong. The balance of online loan product “Huinong e-Loan” reached RMB353.4 billion, becoming a highly competitive brand of ABC in serving Sannong.

Second, making all-out efforts to win the battle against poverty. ABC continuously stepped up policy support and resource allocation to deeply impoverished areas and 52 counties placed under special supervision. The balance of loans to 832 key national-level impoverished counties reached RMB1.28 trillion, an increase of 17.6%, among which RMB489.13 billion was extended to deeply impoverished areas, representing an increase of 21.5%, and RMB483.58 billion was extended for targeted poverty alleviation, up 22.7%, with growth rates all faster than the Bank’s average. ABC kept expanding service channels by setting up 86 new outlets and 48 new self-service banks in 832 key national-level impoverished counties and deeply impoverished areas in the “three regions and three prefectures” (the “three regions” refers to Tibet, four prefectures of southern Xinjiang—Hotan, Aksu, Kashi, and the Kirgiz Autonomous Prefecture of Kizilsu, and the areas of Sichuan, Yunnan, Gansu, and Qinghai provinces with large Tibetan populations; the “three prefectures” are Liangshan in Sichuan, Nujiang in Yunnan, and Linxia in Gansu). The deployment of “Huinongtong Connect” devices covered 89.5% of 832 key national-level impoverished counties. ABC actively supported the industry cultivation and infrastructure development of poverty-stricken areas by employing poverty-relief methods through credit offering, consumer spending, industry promotion and collaboration between eastern and western China. It set up “Anti-poverty-reemergence Fund” and “Development Fund for Rural Revitalization and Poverty Alleviation through Industry Promotion” in four designated poverty alleviation counties, namely Wuqiang and Raoyang of Hebei, Huangping of Guizhou, and Xiushan of Chongqing, in a bid to consolidate the gains in poverty alleviation.

· Ensuring stability and security through financial means, and serving the real economy in a targeted and efficient way

First, improving inclusiveness and availability of financial services. To ensure stability on six key fronts and maintain security in six key areas, ABC implemented fee reduction policy across the board, and fully supported the recovery of the real economy, with loans increasing by RMB1.8 trillion for 2020, making a record high. ABC issued a series of policies and measures to support the resumption of work and production, ease difficulties of small and micro enterprises (SMEs), and stabilize foreign trade and investment. The Bank launched a dedicated credit product, i.e. “Work Resumption Loan”, through which RMB33.64 billion loans were issued for pandemic prevention purposes to 1,080 enterprises, helping SMEs affected by Covid-19 to navigate the crisis. New loans to private enterprises throughout the year reached RMB404.9 billion; new inclusive finance loans to SMEs reached RMB369.2 billion, with a growth rate of 62.3% and the comprehensive financing cost down by 0.93 percentage points. In total, ABC allowed a total of 80 thousand micro, small and medium enterprises to defer principal and interest repayments.

Second, prioritizing the support of major projects of national economy and peoples livelihood. To support major national strategies and projects, ABC introduced tailored financial service solutions to support the development of Xiongan New Area, the Yangtze River Delta Integration, and the Guangdong-Hong Kong-Macao Greater Bay Area. The Bank provided designated policy support for new infrastructure and new urbanization initiatives as well as major projects, lending RMB 612.5 billion to key projects in areas such as transportation, water conservancy, electricity, city pipe network and telecommunication network, and underwriting RMB944.7 billion local government bonds throughout the year.

Third, facilitating the replacement of old economic growth drivers with new ones. To support the healthy development of the manufacturing sector, ABC issued RMB157.5 billion new loans, of which mid-to-long term loans grew by RMB88.7 billion, an increase of 32.6%. ABC introduced financial service solutions for sci-tech innovation enterprises and launched pilot schemes to serve such enterprises, with loans growing faster than 20%. Loans to strategic emerging sector and modern service sector kept growing rapidly.

· Driven by innovation and empowered by technology, digital transformation making new strides

First, continuously improving online service capability. ABC deepened reform for the management of technology and product innovation and worked to enhance the basic capacity of fintech, with IT investment amounting to RMB18.3 billion. Underpinned by technological empowerment, the digital transformation of ABC made big strides. As of the end of 2020, the balance of “ABC E-loan” reached RMB1.31 trillion, an increase of 122.2%. ABC’s online operation capability continued to be strengthened, with the number of registered personal mobile banking customers reaching 360million, an increase of 16.1%, and the number of monthly active users surpassing 100 million. The development of scenario-based finance picked up speed, with smart government affairs, smart schools, smart medical service and other projects rapidly going into operation.

Second, improving the quality and efficiency of business operation. ABC took measures to intensify capital adequacy constraint, promote cost effective operation and apply delicacy management. The Bank made efforts to expedite the development of emerging business, including investment banking, wealth management, internet finance, credit card and custodian business. The balance of wealth management product of ABC Group was RMB2.03 trillion. Debt financing instrument underwritten for non-financial corporate amounted to RMB521.8 billion. Transaction volume of credit cards reached RMB2.1 trillion for the year 2020. ABC launched its brand “One Private Bank”, onboarding 141 thousand private banking customers and the balance of assets under management reaching RMB1.70 trillion. Group synergy was strengthened and the integrated operation of RMB and foreign currencies businesses was accelerated, improving the Bank’s comprehensive and international service capabilities.

Third, proactively committed to green and low-carbon development and building an environmentally friendly and energy-saving green bank. In terms of ecological protection and restoration, pollution control, new energy and other key areas, the Bank enhanced its emphasis on green credit policy, provided stronger credit support for green business, and advanced the management of environmental and social risks, maintaining stable development of such business. As of the end of 2020, the balance of green loans was RMB1.51 trillion, and the proprietary investment of green bonds was RMB65.4 billion denominated in RMB and foreign currencies. The Bank provided RMB120 billion financing for enterprises through green syndicated loan, green M&A loan, green bond, and green asset-backed note for the whole year.

· Intensifying risk management on all fronts to make new achievements in preventing and controlling financial risks

First, consolidating the gains in its Balance Sheet Clean-Up Plan. ABC reinforced the credit risk management and asset quality control in key areas, closely monitored the impact of the pandemic, conducted risk mitigation and resolution in a forward-looking manner, and made more efforts to dispose of non-performing assets, thus maintaining generally stable asset quality faced with this “big pandemic test”.

Second, continuously promoting the development of comprehensive risk management system. ABC strengthened all-round risk management and control system covering the whole process and whole business lines, intensified risk management of information technology, and shored up management of financial products safety. In addition, ABC improved risk management strategies of online credit business, set up enterprise-level smart platform for anti-fraud purposes, and established a risk operation center, in an effort to improve risk control capabilities of online business.

In 2021, ABC will ground its efforts in the new development stage, apply the new development philosophy, and serve the creation of a new pattern of development. It will concentrate efforts to provide financial services for rural revitalization and the real economy, and keep promoting the reform of systems and mechanisms. The Bank will accelerate its digital transformation on all fronts and spare no efforts to secure its leading position at county-level and continue to serve the real economy as a major bank. ABC will make efforts to create new prospects for operation and development, developing itself into an international first-class commercial banking group.

Link: ABC 2020 Annual Report