Improved assets

The lender, the country's third biggest by assets, is planning to "constantly" improve its asset structure and asset management capacity to increase the returns on its expanding portfolios.

As loose monetary policies gradually tighten, commercial banks in China are expected to benefit from a widening gap in the interest spread when China's benchmark interest rates is likely to enter an upward cycle.

Meanwhile, ABC's assets quality has been improving constantly since its historical non-performing assets were spun off in 2008.

Non-performing loans (NPL) dropped to 134.07 billion yuan in 2008 from 818.85 billion yuan in 2007, and further declined to 120.24 billion yuan by the end of 2009.

Its NPL ratio plummeted from the enormous 23.57 percent in 2007 to 2.91 percent by the end of 2009, and further dropped to 2.46 percent by the end of March, the bank said in the prospectus.

ABC's provision coverage ratio reached 105.37 percent by the end of 2009, and it further rose to 123.25 percent by the end of March, closer to the 150 percent required by the banking regulator, indicating that the bank will face less pressure in the future to raise the ratio.

It will reduce the amount of money the bank needs to set aside as provision in the future, which will propel the profits growth.

ABC said it has basically completed its IT infrastructure buildout so its main operating expenses in the next few years will largely be for office decorations in its outlets.

A considerable number of its more than 440,000 employees are located in the less-affluent county regions where general salary levels and living costs are lower, so it does not expect significant increases in salary costs over the next few years.

(China Daily July 13, 2010)