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The analysis of CCB and CITIC

The analysis of CCB and CITIC. background. CCB was founded on 1 October 1954 . CCB is one of the ' big four ' banks in China. In 2011 CCB was the second largest bank in the world and 13th largest company in the world.

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The analysis of CCB and CITIC

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  1. The analysis of CCB and CITIC

  2. background CCB was founded on 1 October 1954 . CCB is one of the 'big four'banksin China. In 2011 CCB was the second largest bank in the world and 13th largest company in the world. The bank has approximately 13,629 domestic branches. Its total assets reached 8.7trillion RMB in 2009. CITIC is established in February 1987. By 2005, its network comprises 418 branches countrywide, and includes established correspondent relationships with 990 banks and their branches in 70 countries around the world. China CITIC’s assets reached RMB 576 billion (USD 71 billion). As of 2006, CITIC had a non-performing loan (NPL) ratio of 2.5% (RMB 11.1 billion). The bank’s capital adequacy ratio is 9.1%.

  3. Important indicators Assets structure Income structure Liabilities structure CONTENTS

  4. The analysis of assets structure From the chat: we can draw the conclusion that the size of CCB is larger than CITIC’s, because the amount of CCB’s total assets is far more than CITIC’s.

  5. The analysis of assets structure we can know that CITIC and CCB mainly rely on loans to make profits.

  6. The analysis of assets structure Loan by business line: CCB CITIC • housing price increasing , the need of personal housing loans has increased. • personal consume attitude change

  7. The analysis of assets structure According to maturity: we can find the percentage of Medium to long-term loans is almost close to 50%. The longer maturity, the greater risk. So, the risk of loans for CCB is greater than CITIC.

  8. The analysis of assets structure As to Investment securities, the percentage of CCB is higher than CITIC’s. the maturity of investment securities is short as a whole. the capital liquidity of CCB is better than CITIC, and CCB’s operating cost is lower than CITIC.

  9. The analysis of assets structure As to Cash and deposits with central banks, the percentage of CCB is higher than CITIC’s. The more cash and deposits with central banks, the better bank security is. So, the security of CCB is better than CITIC.

  10. The analysis of liabilities structure From the chart: We know the amount of CCB liabilities is larger than CITIC’s.

  11. The analysis of liabilities structure Deposits from customers: the percentages of Deposits from customers take an important place. CCB is a State-controlled bank, depositor will have more faith to State-controlled banks, other small banks must increase its deposits rate to attract depositors, and it will increases banks’ operating cost.

  12. The analysis of liabilities structure Deposits and placement from banks and non-bank financial institutions: smaller banks are more dependent on Deposits and placement from banks and non-bank financial institutions. not only can help banks draw into funds, but also can reduce banks’ cost.

  13. The analysis of liabilities structure Debt securities payable: the percentages of CITIC’s Debt securities payable is higher than CCB’s. Because the cost of making deposits is high for CITIC.

  14. The analysis of liabilities structure CCB CITIC demand deposits and time deposits： Demand deposits: increase capital fluidity ,high cost and can increase bank’s operating cost Time deposits: poor fluidity ,cost lower ,reduce operating cost and make profit

  15. The analysis of imcome structure The comparison of the two banks’ interest income and non-interest income: CCB CITIC the cost of non-interest service is lower than interest service. it is not subject to interest rate risk. there are many non-interest activities belong to off balance sheet activities.

  16. The analysis of imcome structure • After calculation, we can find that CCB’s net profit is about 6 times of CITIC’s. • CCB’s net interest income accounts for the proportion of total revenues is 78.5%，CITIC’s is 86.2%. • CCB’s net non-interest income proportion is 22.5%. CITIC’s is 13.8%.

  17. The analysis of imcome structure As a big bank, CCB’s main income is from loans, its revenue from intermediary business is much more than small banks. CITIC Bank, interest income mainly relies on loans and its development of intermediary business can not keep up with CCB. The bank's net non-interest income is mainly from the consultants and advisory fees.

  18. The analysis of imcome structure interest income： the small bank is mainly relying on loans to obtain interest income, so CITIC’s interest income from loans ratio is bigger than CCB’s. CCB tends to trade securities for short-term profits while small banks do not,so CITIC’s investment imcome is smaller than the CCB.

  19. The analysis of imcome structure interest expense： Interest expense on customer deposits is a maximum proportion. CCB not only the total assets is more than CITIC, but also the annual net profit. the big banks’ commercial reputation is higher than small banks’. So people are willing to put money into the big banks.

  20. analysis of important indicators Comparison of profitability: ROA and ROE of CCB are greater than CITIC bank’s. ROE reflects the size of the Bank's equity capital efficiency and the amount of profits realized by the units of equity capital. Due to the larger ROE of CCB, the CCB shareholders’ income level is higher than the CITIC Bank.

  21. analysis of important indicators the NIM of CCB is less than the NIM of CITIC. In the fields of controlling earning assets and attract cheaper source of funding, CITIC Bank performed better than CCB. the figure of CIR shows that CCB need to pay more costs in order to obtain revenue. CCB does worse than CITIC Bank in reducing operating costs.

  22. analysis of important indicators Comparison of risk:

  23. analysis of important indicators 1 loan to deposit ratio According to the People's Bank of China, the commercial bank loan to deposit ratio can not exceed 75%. In order to improve their profitability, CITIC Bank made a choice to increase the risk.

  24. analysis of important indicators provision coverage ratio 2 the CCB and China CITIC bank's provision coverage ratio is roughly the same. Due to the smaller provision coverage of CITIC Bank, CITIC is much safer than CCB.

  25. analysis of important indicators NPL 3 Greater NPL indicates that possibility of the recovery of the principal and interest is smaller. The greater the risk is and the worse the bank’s security is. Compared with CITIC Bank, CCB faces larger risks from non-performing loans than CITIC.

  26. analysis of important indicators Core capital adequacy ratio 4 Capital adequacy ratio and core capital adequacy ratio is an indicator for measuring a bank soundness and ability to resist risks. The two commercial banks' capital adequacy ratio and core capital adequacy ratio reached the regulatory standards, which indicate that they have strong ability to resist risks.

  27. Thank you ! Team member： Wu Lingling Li Jishuang Lv Mengzhu Ye Xiaofei Wang Chenhui

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