RETAIL BANKING | Roxanne Uy, Hong Kong

ICBC (Asia) CEO reveals plans to capitalise on China’s Belt and Road Initiative

Jiang Yisheng wants to fully tap Hong Kong’s potential as a “super connector”.

Analysts predict that Hong Kong banks’ asset quality will continue to deteriorate due to a number of factors such as rising delinquencies, weak growth in global demand and higher borrowing costs owing to further monetary tightening in the US. Jiang Yisheng, CEO of ICBC (Asia), says that amidst the economic uncertainties, the bank has implemented some measures aimed at strengthening its capability to control both risks and asset quality.

“Presently, ICBC (Asia) maintains its non-performing loan ratio at a reasonable level and will endeavour to improve its credit risk management system unceasingly. For instance, the bank has enhanced the due diligence for its lending, the procedure for reviewing and approving loan applications as well as post-loan management,” he adds.

Jiang was appointed as CEO in December 2015. After almost a year into the position, he reveals his views of Hong Kong’s current banking sector and his future plans for ICBC (Asia) in an exclusive interview with Asian Banking and Finance.

ABF: What are the biggest challenges facing Hong Kong banks today?
Nowadays, the global economy is extremely complicated and the financial markets fluctuate more wildly. Some companies have operational difficulties which are structural in nature. In such circumstances, I think the banks in Hong Kong are facing a number of major challenges, namely; how to enhance the capability to control the asset quality and withstand risks; how to raise the standards of business management and how to strengthen the overall capability to serve customers. If the banks can handle these challenges well, the entire banking sector will be able to operate steadily and efficiently and achieve healthy and sustainable development.

ICBC (Asia) will make three strategic preparations for the situation. Firstly, the bank will reinforce its foothold in Hong Kong’s market and speed up the consolidation of the group’s resources in Asia Pacific. The ICBC Group has positioned ICBC (Asia) as a centre for its banking business in Asia Pacific. ICBC (Asia) has already set up a team dedicated to business development and it will actively cooperate with other institutions in developing cross-region businesses.

Secondly, the bank will connect with mainland China to fully tap Hong Kong’s potential as a “super connector” in the Belt and Road Initiative. We will capitalise on Hong Kong’s dual role as an important international financial centre and “super connector” to help China’s enterprises tap overseas markets with their production capacity and capital as the country implements its Belt and Road Initiative. We will do so by seizing opportunities to offer loans for mergers and acquisitions, undertake debt and equity financing as well as structured finance.

Thirdly, ICBC (Asia) will “go global” by speeding up its transformation into a global asset management bank. Presently, high-net-worth customers in mainland China have an increasingly strong demand for global asset allocation, and ICBC (Asia) will capture the opportunity by giving full play to its advantage as a bank with a full banking licence. It will develop its asset management into a large and strong business.

ABF: You were appointed as CEO in December 2015. Ten months into the position, what changes have you implemented and what are your future plans?
Since I assumed the office of the CEO of ICBC (Asia) in December of 2015, I’ve been faced with a market where Hong Kong’s banking sector has shifted down a gear from rapid growth in the past. After having grown its business by leaps and bounds in the past several years, ICBC (Asia) has now entered a period for consolidating its businesses. It now has to meet new requirements to cope with a new situation which is marked by adjustments in organic growth and optimisation of organisational structure.

To prepare for that, I have been working with the management of ICBC (Asia) to study the situation and make timely adjustments to the operational and management strategies. We have decided to actively develop cross-regions businesses, speed up the transformation of the bank’s business model and the implementation of its strategy for comprehensive development. Such endeavours have already yielded good results. In the first half of 2016, ICBC (Asia) achieved double-digit percentage growth in both the scale of business and profit, thus ranking it among the top comparable peers in the industry.

As the scale of its business is growing, ICBC (Asia) has entered a crucial stage of its development into a large bank. In the future, the bank will adhere to its customer-oriented approach to business and step up its efforts in business transformation and innovation. It will strive to build a large-scale regional, comprehensive financial services group with even greater influence in the market and with international standards of management in Hong Kong and the surrounding areas. Such effort will also serve as our greater contribution to Hong Kong’s economy, financial sector and prosperity.

ABF: ICBC (Asia) has launched a number of initiatives concerning internet and mobile banking. What are the bank's other new projects/initiatives in the digital space?
ICBC (Asia) adheres to its customer-oriented approach when developing electronic banking. In recent years, it has adopted the ‘internet thinking’ to improve the mode of service, plan for its product innovation and actively develop the cross-border electronic commerce.

In the first half of 2016, ICBC (Asia) launched an upgraded version of mobile banking. The move was a revolutionary change because upgraded mobile banking is open not only to the bank’s customers but also to people who are not its customers. Any customers can just find information about wealth management products and services on the system without logging in. They can even customise the window for financial services on the screen according to their personal preferences and habits to enjoy efficient, convenient and quality mobile financial services.

Meanwhile, ICBC (Asia) has been actively promoting its business into internet-based financial services. It leverages its parent bank’s electronic commerce platform, ICBC Mall, huge customer base and rich variety of services to provide Hong Kong-based companies with a one-stop solution for cross-border electronic commerce. Such service has enabled ICBC (Asia) to assists Hong Kong’s small- and medium-sized businesses in developing mainland China’s market.

ABF: How do you picture the retail bank branch of the future? What do you think will be the trends given the big push for digitisation across the region?
A bank’s conventional role as a retail outlet is being transformed gradually. While most of its teller services and transactions will be gradually digitised, its retail outlets will not be supplanted overnight. It is because face-to-face communication between customers and a bank’s employees still plays a key role in banking, and as such, a bank will transform its retail outlet into a place where it can establish and build up its customer relations. For instance, the retail outlet can serve as a “financial supermarket” which displays and offers a wide range of financial products under one roof.

As internet is further integrated into the financial sector, banks not only step up their efforts to develop more electronic services and self-service banking, but also endeavour to enhance their customers’ experience of “one-on-one” personalised services. As “big data” permeates all levels of “mega retail”, digitisation helps banks attain breakthroughs in such aspects as real time, interactivity, openness and depth of the services that they are providing and of the products that they design. This enables banks to position their products and services precisely for their target customers, namely by predicting their needs and conducting effective risk appraisals. As a result, the banks can extend the range of their products and services and upgrade them.

ICBC (Asia) has been making great strides in that direction. In the past two years, the bank has set up seven personal banking centres with digitalised features. Last year, it established a modernised and digitalised flagship branch in Causeway Bay - a busy district of Hong Kong - and the branch has been performing well.

ABF: What are your key business philosophies?
I believe that a commercial bank should always adhere to the principle that “the financial sector serves the needs of real economy”, that is, a commercial bank should grow together with a nation and enterprises through cooperation, by adapting itself to the changes in economic environment, by capturing opportunities and by fitting in with the national strategies and policies.

Under the present circumstances, ICBC (Asia) will fit in firmly with China’s national strategies such as the Belt and Road Initiative and the internationalisation of the renminbi. It will also actively capitalise on the increasing connectivity between the financial markets of mainland China and Hong Kong and speed up the consolidation of the resources in Asia Pacific so as to build a framework for a cross-market, comprehensive and integrated business.

This will enable the bank to provide a comprehensive range of financial services (such as financing, services for mergers and acquisitions and settlement, etc.) for the countries and enterprises in Asia Pacific and those covered by the Belt and Road Initiative. This is one of the ways for ICBC (Asia) to contribute to the economy and prosperity of both mainland China and Hong Kong.

In the course of operation and management, I advocate and practise ICBC Group’s eight management concepts which cover "development, benefits, risks, services, brand, teamwork, competent persons and learning". To put it in a nutshell, we take a customer-oriented approach to business and create value through services. Under this principle, we foster a sense of responsibility and awareness of the overall situation, and align the interests of customers, employees and society with each other. We also cultivate a competent work force of great integrity so as to provide comprehensive and efficient financial services for customers, thus establishing a leading brand of financial services in the market.

All these measures are aimed at benefitting economic, social and cultural developments on one hand and at achieving comprehensive, coordinated and sustainable development on the other hand. The eight management concepts form a dynamic and coherent system which permeates all levels and aspects of business operations and internal management of ICBC (Asia), and thus serves as both strategic guidance for the bank’s long-term development and guidelines for action.

ABF: What three goals are you focussed on in the next 12 months?
In the foreseeable future, we will be working towards three goals as follows:

Firstly, we aim to facilitate development by thoroughly enhancing the quality and efficiency of the operation of the core business. ICBC (Asia) will reinforce its foothold in Hong Kong, capitalise on the growth momentum of mainland China and extend its footprint to Asia Pacific. It will also enhance its capability to coordinate the developments of the businesses within the ICBC Group and to operate cross-region businesses. We aim to enhance the quality of development while maintaining steady growth in the scale of assets as we are shifting the focus from “building a large company” to “building a strong enterprise”.

Secondly, we will adjust the structure by forming a framework for sustainable business development which is driven by diverse operations. ICBC (Asia) will further adjust and optimise the operation structure. Specifically, the bank will speed up its transformation from a sizeable asset operation bank into a large asset management bank as well as its transformation from a conventional commercial bank into a comprehensive financial group.

Thirdly, we will step up risk control to reinforce the foundation for sustainable and steady development. ICBC (Asia) will further improve the overall risk management system. It will enhance its capability to prejudge and manage credit risks, market risks and operational risks so as to minimise these risks and ensure that the risks to the overall operation are manageable. 

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