The Practice of Green Credit in ICBC

Yin Hong

2014.05.22

Content

3.Typical Cases3.Typical Cases

1.Overview1.Overview

2.Green Credit System2.Green Credit System

1.Overview1.Overview

2.Green Credit System2.Green Credit System

3.Typical Cases3.Typical Cases

1.Overview1.Overview

2.Green Credit System2.Green Credit System

1.Overview1.Overview

2.Green Credit System2.Green Credit System

3.Typical Cases3.Typical Cases

1.Overview1.Overview

2.Green Credit System2.Green Credit System

1.Overview1.Overview

2.Green Credit System2.Green Credit System

3.Cases3.Cases

1.Overview of ICBC Group1.Overview of ICBC Group

2.Green Credit System 2.Green Credit System

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1.1 History

incorporated in 1984

wholly restructed to a joint-stock limited company in 2005,

listed on stock exchange in Shanghai and Hongkong in 2007

ICBC LIMITED

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1.2 Main Indicators

One of the top large banks in the world

Customer base

4.735 million corporate

432 million personal customers

Diversified business structure

Network

17,245 domestic institutions

329 oversea institutions

1903 correspondent banks

Online banking, telephone banking and self-service banking

The most profitable bank in the world. Net profit: $43.38 billion The largest bank in the world. Total Assets $3.12 trillion

ROA(1.44 ％ ) and ROE(21.92 ％ )

Outperform Peers

Excellent Assets Quality

NPL ratio 0.94％ Allowance to NPL 257.19％

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1.3 International Awards

In 2013 ， ICBC has won 51 international awards and 168 domestic awards.

In 2013 ， ICBC has won 51 international awards and 168 domestic awards.

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1.4 Awards in Green Finance

The Bank strives to realize the integration of economic and social responsibilities, establishing the image of a large responsible bank in the aspects of supporting economic and social development, protecting environment and resources, and sponsoring public interest activities.

“Best Social Responsibility Financial Institution Award of the Year”

“Most Responsible Enterprise”

“The Listed Company Green Finance Award”

“Environmental Responsibility Leading Financial Award”

Green Financial Innovation Award

The National Energy Saving Advanced Collective

--In 2012,ICBC joined the United Nations Global Compact

--Currently ,ICBC is being on procedure to join the UNEP FI.

--In 2012,ICBC joined the United Nations Global Compact

--Currently ,ICBC is being on procedure to join the UNEP FI.

Content

1.Overview1.Overview

2.Green Credit System2.Green Credit System

1.Overview1.Overview1.Overview1.Overview1.Overview1.Overview1.Overview1.Overview1.Overview1.Overview

3.Cases3.Cases

1.Overview1.Overview

2.Green Credit System2.Green Credit System

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2.1 Green Credit Framwork

Stratege----direction

Policy----map

Classification----tool

Processing----rout

Risk Monitoring and Controlling

Support to Green Economy

Improvement of E&S Performance in banking’s operation

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2.2 Strategy

Vision: build the most profitable, outstanding, respectable international first-class modern financial enterprise

Our Green Credit Strategy

Target: Be committed to building a domestic leading, international first-class green

financial institution

Basic Tenet: Give full play to the supporting and guiding function of credit , so as to

achieve better-saved resources, more friendly environment and more harmonious

society.

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2.1 Understanding of green credit

Environment Protection

Sustainable Development（ Balanced development between economy

and environment ）

Green Credit

Credit Structure Adjustment

E&S Risk Management Green Credit Market

Credit Structure of Industry

Credit Structure of Customer

Credit Structure of Destination

Resource Saving

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2.3 Policy

In 2014,ICBC revised and distributed the (green) credit policy for 61

industries ,including Electric Power, City Infrastructure, Steel, Culture ,

Tourism, Manufacture and etc.

Entry Criteria (Project Entry Criteria& Client Entry Criteria)

Project Entry Criteria: Scale ,energy efficiency ,technology, pollution emission

,financial indicators etc.

Limitation and Exit Criteria: main high-polluting & Energy-intensive

industries (such as steel, cement, paper and nonferrous metals etc) and

overcapacity industries.

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2.4 Categorization

In accordance with the "green" degree of the loan , namely its degree of E&S risks, all loans of domestic corporate customers are classified into 4 Categories, 12 Segments.

Friendly category(4 segments): ecological protection,clean energy and comprehensive utilization of resources etc.

Qualified category(2 segments)

Observed category(2 segments)

Rectification category(4 segments): environmental illegal or fined by environment protection department

established the link between green credit categories and enterprise credit rating that was

iintegrated in the loan process ;it is also a key criterion in the overall evaluation of the custom

er.

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2.5 Entire-process management over E&S risks

ICBC integrate the green credit requirement into the whole credit processing,

including credit survey, project assessment and approval, contract signing and

Post-loan Stage

Principle: One-Vote Negation System

Improve the mechanism of monitoring, identification, control and mitigation

E&S risks.

System Control: ICBC locks the high-hazard environment industry (such as heavy metal client )in the credit system

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2.6 Risk Management

Overcapacity industry:

--Apply the limit management for 8 overcapacity industries to control the total issued loan , including steel, cement, smelt of common nonferrous metals, coal chemical industry , photovoltaic manufacturing,ship manufacturing, wind power generation equipment, and sheet glass.

Heavy Metal Emission, High Hazardous Chemical Industry

--Intensify the financial risk control on areas of heavy metal emission and high hazardous chemical products, for the purpose of further reducing loans.

Haze-contributing Industries

----Set up specific requirements on industry’s credit structure adjustment, strict implementation of entry criteria in environmental protection aspect, and cultivation of emerging credit markets including energy saving and environmental protection. These measures were aimed at intensifying the credit management on the industries related to haze.

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2.7 Support Green Economy

Identify the Green Economy area as encouraging

industries in related policies

Differential policy:

Given the same risk and return level, priority shall be

given to the project in green economy.

Performance( By the end of 2013)

the loans granted to green economic fields totaled at

RMB 598 billion.

--the total loan balance for renewable and clean

energy totaled art RMB199.90 billion.

--the total loan balance for Green Traffic totaled art

RMB385.06 billion.

199.90

385.06

0

100

200

300

400

500

201312 201212 201112

RMB billion Renewable and Clean Energy Green Traffic

Loan made to Green Economy Sectors598

593.4

590.4

2013 2012 2011

Billion

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2.8 Low-carbon Operation

Advocate Low-carbon Operation :

--The Bank promoted energy saving

and consumption reduction, starting

from tiny things, from everyone and

from now

Promoting E-banking:

--E-banking proportion increase to

80.2%

“green lighting project”

energy-saving modification

projects of building

energy-saving monitoring

arrangements

Proportion of business volume of E-banking (unit:%)

80.2

75.1

70.1

2013 2012 2011

Office paper consumption(unit:in 100million pieces)

0.096 0.097

0.11

2013 2012 2011

Office power consumption (unit:kilowatt-hour)

21021205

21898969

20685557

2013 2012 2011

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2.9 Capability Building

Strengthen green credit training

Contents

Policy and rule about green credit

Knowledge about new energy and low carbon econmy

Trainee

Manager at all levels

Customer manager

Widen domestic and international

communication about green financing

with WWF 、 IFC 、 UNEPFI、

KPMG 、 PWC 、 HSBC……

Content

3.Typical Cases3.Typical Cases

1.Overview1.Overview

2.Green Credit System2.Green Credit System

1.Overview1.Overview

2.Green Credit System2.Green Credit System

3.Typical Cases3.Typical Cases

1.Overview1.Overview

2.Green Credit System2.Green Credit System

1.Overview1.Overview

2.Green Credit System2.Green Credit System

3.Typical Cases3.Typical Cases

1.Overview1.Overview

2.Green Credit System2.Green Credit System

1.Overview1.Overview

2.Green Credit System2.Green Credit System

3.Cases3.Cases

1.Overview1.Overview

2.Green Credit System 2.Green Credit System

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Case 1 -PPP model for rail transit construction

Background: 

Beijing MTR Corporation Limited (BJ MTR) is the first foreign invested cooperation company in urban railway transportation sector in mainland China.

Beijing Metro Line 14 is the second subway construction project that use PPP mode and it is a very important project in Beijing Rail Transit Construction Planning.

BJ MTR is responsible for the construction of Part B of Line 14.Total Investment of Part B is RMB 15.3 billion. The borrower apply for RMB 10billion.

Partnership: Beijing MTR Corporation Limited ,Beijing Municipal Government

Key Factors:

The franchising period is 30years.

Although the actual fare income is lower than the level of agreement, the Beijing municipal government is responsible for the borrower's income gap to compensate.

ICBC approved loan is 5billions.

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Case2 --Wind and Solar Energy in Gansu

Solar and wind power has a strong complementarity.

As of June 2013, ICBC has offered financial support to

39 wind power projects in Gansu province (total installed capacity of 6.62 million kilowatts),

44 of solar power generation project (total installed capacity of 2.34 million kw) . Since

2009, our cumulative distribution to Wind&Solar Power in Gansu Province is totaled ￥ 9.81 billion.

ICBC’s supporting project can generate about 5.2 billion KWH per year, which can realize saving standard coal about 1.71 million tons, reducing 4.12 million tons of carbon dioxide each year.

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Case 3:Xixi Wetland Park in Hangzhou

  Xixi Wetland Park is the first national urban Wetland Park, is listed as national urban Wetland Park model. It is also culture wetland and farmer wetland.

Consideration of ecological problems in the process of project construction and farmers move .

Relocation measures for farmers include providing housing for farmers, establish multiple dwellings, and offer social security benefits, also provide venture funds and so on.

2007-2009 ICBC offered loans about ￥ 1.8 billion to this project, by the end of September 2013, outstanding loans is ￥ 620 million.

In order to support project development, ICBC adopted way of bridging loan, resolving effectively the funding gap in pre-project stage.

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Case 4:Supporting the Renewable Energy in South Africa

April 2013, ICBC signed agreement with South Africa's standard Bank.

In the next 20 year, ICBC will provide US 2 billion loans to support the development of renewable energy in South Africa by the way of syndicated loans.

Through the partnership with standard bank, ICBC aims to promote South Africa renewable energy use, and help to protect the environment of South Africa.

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THANKS!THANKS!