ICBC 1Q15 earnings increase 1.4% YoY to RMB74.3b

It's experiencing stable operations in tough times.

ICBC’s 1Q15 earnings were up 1.4% YoY to RMB74.3b, equivalent to 26.5% of CCB International's full-year forecast and in line with its estimate.

According to a research note from CCB International, further, PPOP growth was stable at 7.3% due to unchanged NIM YoY.

Credit cost rose 20bp YoY to 74bp in 1Q15. The QoQ increase in ICBC’s NPL ratio (16bp) and new NPL formation ratio (130bp) is higher for ICBC than any of the other Big-four banks.

This is not necessarily indicative of a worse NPL quality trend compared with peers, given that ICBC has adopted more stringent criteria to recognize NPLs.

Fee income recorded 17.7% QoQ growth, which is impressive given the bank’s high base, said the report.

Here's more from CCB International:

Interbank business achieved strong growth. ICBC’s reverse repo assets and receivables investment increased 40.8% and 10.8% QoQ, implying that it is now shifting more resources to interbank business.

We expect bills and bonds, rather than TBRs, to be used as collateral for the interbank business. ICBC’s risk appetite for the interbank bill business remains low.

Expect the pan-asset management strategy to bear fruit. Banks in China are now facing more competition in asset management (especially for fixed-income products) from brokerages, insurance companies and mutual fund firms.

We believe the bank’s “Pan-asset management strategy” will ultimately boost fee income by leveraging ICBC’s large client base and network.