1

CORPORATE EXPENSE

MANAGEMENT SOLUTIONS

DRIVE SAVINGS | BENEFIT EMPLOYEES | MANAGE GLOBALLY | MAXIMISE CONTROL | DRIVE SAVINGS | BENEFIT EMPLOYEES | MANAGE GLOBALLY | REAL BUSINESS. REAL SOLUTIONS.SM

HKUST – SZ PT MBA

ICBC International expansion

Strategy

Group 1

Feb 2014

Agenda

• ICBC Business introduction.

• Challenge on China Banking Market and opportunity in international.

• ICBC current Competitive advantage and industry KSF.

• How competitive advantage can help to international expansion.

• Conclusion.

2

Overview

3

1984 Industrial and Commercial Bank of China Limited, formerly known as Industrial and Commercial Bank of China, was established.

2005 Wholly restructured to a joint-stock limited company

2006 Listed on SSE and SSHK

2007 Ranked as No. 1 Bank in Stock Value

Revenue Structure

4

39.9% UP

79%

70%

Challenges from Domestic Banking Market

Interests rate Labialization New Market entrance, incl

bank with foreign capital

5

0

2

4

6

8Deposite ( 1Ybenchmark)

Load(1~3Ybenchmark)

The bloom of Internet Finance:

Estimated almost 800b RMB out flow from bank deposit to internet finance It raised the carrying cost of bank’s deposit, and also cannibalize the capital fund.

Net interest Margin

ICBC about 2.6%

Big 5 2%~2.6%

TW 1%

Japan 1%~1.2%

Size of price of international Market

Spurred needs for migration,

education and tourism.

China Copr go outside.

China High net worth client Investment

RMB offshore business

Emerging market

opportunity .2003-2006 2007-2011

State ownedcompanyPrivatecompany

China Annual Value of FDI Unit: Million $

$774.7

$2048.3

$580.8$51.3

11%

9%

11%

7%

9%

0% 5% 10% 15%

Bratain

Germany

Singapore

Italy

US

% Enterprises use RMB assettlement currency

• In Feb 2013, ICBC Singapore branch become the 1st RMB clearing bank outside China

• In the whole 2013, ICBC Singapore branch have completed 38,000 clearing settlements, the total amount arrived to 2.6 trillion RMB.

• Up to 2013, The number of Chinese emigrants has reached 934.3 million• Up to 2012, Chinese students studying abroad reached 1,136,900• In 2013 China's outbound tourism reached 98 million passengers

• 60% contribution to global economy

• Closed trade with China market• Low barriers to entry

Top 10 Ranking Bank has International Expansion

Good coverage in all tiers cities

High sales

turnover

Highest numbers of

ATMs in country

Good return and low risk

productsCapability to cope

with different Customer profiles

Diversified investment

Matured operations

Secured security system

Focused talent development

Motivated employees

Leadership in finance solutions providers

Account management

High Quality

Of Services

Great corporate

relationship

Trusty brand image

Capital risk management

Strong IT operations in Internet and Mobile Apps

Staff trainings

Network coverage

Cross sale

capability

Full Finance

Solutions

Win Customers’

Trust

Efficient Transactions

ICBC’s ACTIVITY MAP

ICBC competitive advantages in Domestic

Full finance solutions

Good network coverage (outlet, Internet and Mobile Apps)

Account management/customer relationship

Strong IT and operations

Capital risk management

How competitive advantage can help to ICBCInternational Expansion?

Key Success factor for International banking

Competitive advantage support

Global Network and expert • Strong profit to support international expand investment.• Can focus on China related market:Import/export related Trade finance market.China Corp global expansion.

Strong IT and Operation • IT and operation advantage can expand on global service.

Global capital Risk management • Need to build up

Cross sale capability in globalaccount

• Scale Full Finance Solution capability

Recommendation: International Expansion

Domestic Market expansion: Interest income

International expansion

International expansion

Size

of

Pri

ce

Competitive advantageStrong

Weak

Strong

Domestic Market expansion: Non Interest

income

Current In 5 Year

ICBC Global Banking Strategy

International Expansion Result: Good Progress

International Expansion Result: Good Progress

1.5

2

2.5

3

3.5

4

2007 2008 2009 2010 2011 2012

International Operational Income %

international income

ICBC: Pride of China

Q&A

HSBC Competitive Advantage

International Expansion Result: Good Progress

30%

International Expansion Result: Good Progress