10:00AM New York - Industrial and Commercial Bank of China reported net profit for the year 2007 increased 65% to Rmb 82.3 billion driven by strong growth in net fee and commissions.

Annual Earnings Review

The Industrial and Commercial Bank of China reported net fee and commission income in the year ended December 31st rose 110.4% from 2006 to Rmb34.4 billion. For the year, net profit gained 64.9% year-on-year to Rmb 82.3 billion. Earnings per share also increased to Rmb 0.24 per share. In particular, net interest income increased by 37.3%, and net fee and commission income grew by 110.4%. ICBC’s cost-to-income ratio fell by 1.7% from 2006 to 34.7% in 2007.

The Bank proposed a full-year dividend of Rmb 0.133 per share.

Due to the increases of the PBOC benchmark lending rate for 6 times during the year and the improvement in quality and mixture of the Bank’s loan book, the average yield of loans to customers increased from 5.42% in the last year to 6.11% in 2007. The upturn in investment yield curve and adjustment to the investment portfolio resulted in an increase of average yield on investment in securities from 2.60% in the past year to 3.06% in 2007. Besides, the average yield of amount due from banks and other financial institutions increased from 3.46% to 4.18%, due to the increase of average interest rates in the inter-bank money market and intensification of bilateral currency operation. As a result of the above, the average yield of interest-generating assets increased by 45 basis points to 4.45%.

Interest income amounted to RMB357,287 million, representing an increase of RMB85,638 million or 31.5%. The aggregate growth of interest income from loans and advances to customers and investment in securities contributed to 89.2% of the total increase in interest income.

Segment Review

During the year, the Industrial and Commercial Bank of China’s return on average total assets increased by 31 basis points from 2006 to 1.02%, while the return on weighted average equity advanced 86 basis points to 16.23%.

Profitability of asset and liability business increase

The average balance of loans and advances to customers grew from Rmb 3,464,384 million to Rmb 3,893,311 million, representing an increase of Rmb 428,927 million or 12.4%, as the bank has kept a moderate growth of loans in response to the growing interest rates.

Net interest spread and net increased margin jumped 35 basis points and 39 basis points from a year earlier to 2.67% and 2.80% respectively. ICBC’s total renminbi loans increased 10.3% from 2006 to Rmb 350 billion, as loans were provided mainly to sectors with controlled risk.

Loans to small enterprises increased 50% from 2006 to Rmb213.9 billion, while personal loans advanced 30.6% on the year to Rmb752.1 billion.

In addition, ICBC’s consolidated loan yield increased by 69 basis points to 6.11% in 2007 from 5.42% in 2006.

In the treasury business, the Bank increased its investment in renminbi credit products and further adjusted the duration structure of its renminbi investment portfolio, resulting in a 65-basis point increase in yield on non-restructuring related bond investments, to 3.48% in 2007 from 2.83% in 2006.

In order to cater for the wealth management product of its customers ICBC channeled a huge portion of demand deposits to wealth management products, a development which increased the proportion of demand deposits in its deposit base.

On the overall, deposits remained stable despite the tightening measures implemented by the central bank that resulted in a series of rate hikes.

At the end of 2007, ICBC’s total customer deposits and deposits from other banks and financial institutions increased 13.9% from a year ago to Rmb7,626 billion.

In cooperation with strategic investor Goldman Sachs, the Bank launched the research and development of derivatives and expanded the size of trading business to increase the return on non-credit assets, which accounted for 54.4% of the total assets. In particular, the yield on the investment in securities not related to restructuring reached 3.48% with a year-on-year increase of 0.65 percentage points.

The sales of various wealth management products amounted to Rmb1,233.9 billion, a year-on-year growth of 181.7%. The number of bank cards issued reached 210 million, representing a net increase of 21.49 million; and related consumption amount totaled Rmb 616.2 billion at a growth rate of 66.5%. Furthermore, the number of credit cards issued and related consumption amount reached 23.38 million and Rmb 161.9 billion respectively.

The income from investment banking also reached Rmb 4,505 million, with a growth rate of 45.4%. Total net value of assets under custody reached Rmb 1,316 billion, an increase of 1.8 times over last year.