BANK MAGNET: ICBC has become the world's largest bank by deposits (XINHUA)

The year 2008 was a turbulent one for the global banking sector. While some banks around the world nearly went bust and had to turn to governments for help, the Industrial and Commercial Bank of China (ICBC) emerged stronger than ever.

ICBC's success was achieved amid the overall constraint of its opponents. HSBC Holdings Plc, the world's most profitable bank in 2007, realized a net profit of $5.7 billion, a steep annual decrease of 70 percent. The second most profitable bank in 2007, Royal Bank of Scotland Group Plc, had a loss of $34.4 billion last year.

In 2008, ICBC realized an after-tax net profit of 111.2 billion yuan ($16.5 billion), a 35-percent increase year on year, according to its 2008 annual report, and became the world's most profitable bank.

Reserved opportunism

At the end of the first quarter of this year, ICBC's client deposits totaled 9.1 trillion yuan ($1.3 trillion), an increase of 900 billion yuan ($132 billion) from the end of 2008, making ICBC the world's largest commercial bank in terms of deposits.

ICBC remained stable during the financial crisis because it has always regarded clients' deposits as the basic source of its financing rather than the financial market, an unnamed manager from ICBC told Xinhua News Agency.

ICBC has the world's largest client base with 3.1 million commercial clients and 190 million individual clients. Its business office network covers all cities in China, and it has about 50,000 ATMs and other self-service facilities.

Even amid this year's fast loan growth, the ICBC's loan/deposit ratio was only 57.6 percent, which laid a solid foundation for its sustainable development in the future, the manager said.

But amid the global financial turmoil, the bank is under great pressure this year, Jiang Jianqing, President of ICBC, told the media on April 16.

Jiang pointed out that the Chinese economy has shown signs of stabilizing and becoming warmer, as investment, consumption and some confidence indexes related to macro-economy have rebounded. However, it was still too early to determine whether the Chinese economy had started healing, he said. Growth rates of exports, consumer price index and producer price index all fell to the negative territory. Fiscal revenue and industrial profits continued decreasing.

ICBC is considering the financial crisis as a big test. "Only after being tested by the economic cycle can a bank become an excellent one," Jiang said.

In 2008, the central bank had cut interest rates five times, which took a toll on ICBC, because the difference in deposit and loan interest constituted a big portion of its profit. Interest rate cuts had a negative impact on ICBC's profit, Jiang said, along with the bank's 30-percent discount on housing mortgage loans and increasing costs of additional fixed deposits as a result of the sluggish capital market.

But signs of a recovery in the domestic economy will exert a positive influence on the development of the banking industry this year, Jiang added.

Overseas expansion

Although being the world's most profitable bank, ICBC's profits come mostly from domestic businesses.