Tailor-made new financial products had been offered to small enterprises continuously. By 30 June, loans to small enterprises reached a balance of 249.532 billion, an increment of 11.16% from the beginning of the year. It has also been cooperating with Alibaba to develop new electronic corporate banking products such as “Joint Borrowing & Joint Guarantee Loans”, “Quick Finance” and “Single Order Financing”. Within the half year, loans amounting to 520 million had been extended to 175 customers. 

CCB was a pioneer in the mainland to establish a “Customer Day” system in which management personnel from headquarters, branches and sub-branches would meet customers on constant basis. From January to June, more than 1,500 customers were received and over 1,700 issues received from customers were tackled. Progress in customisation and differentiation of customer services was achieved. While solid work on branch transformation was being carried out, CCB set up teams of private banking consultants and experts, establishing 81 wealth management centres and more than 1,570 VIP centres. Its private banking business in Beijing and Shanghai had commenced operation successively, providing comprehensive and customised services in exclusive financial management products, asset management, advice and consultation, public welfare and charity trusts for medium to high-end customers. 

CCB was the first in China to establish a centralized network of the 95533 Customer Service Hotline system for its call centres, providing a unified 95533 customer service platform for the whole bank. By moving forward the "agent service" choice in the menu, the average speed of answering customer’s enquiry was reduced from 45 seconds to 15 seconds and the rate of successful connection was raised to 98%. By 30 June, with 21.4030 million new customers in its electronic banking business, CCB boasted a cumulative customer count of 92.1006 million, an increase of 30.27% from the end of the previous year. The transaction volume for the period amounted to 77.64 trillion, a 143.92% increase over the same period last year and setting a historical record. 

The competitiveness of CCB’s credit card business was further lifted. During the period, CCB launched a number of new Olympic-themed products including an Olympic platinum card and an “Elite Entrepreneur Card” specifically targeting successful entrepreneurs. The number of additional dual currency cards issued during the period was 3.01 million, the highest among all Chinese domestic banks. Credit card spending increased by 95.7% over the same period last year, while the amount of credit card overdrafts saw an increase of 38.7% over the beginning of this year, launching CCB into the leading position among the four major Chinese commercial banks in terms of both credit card spending and overdrafts amount. 

In providing services to the Olympics, CCB was actively getting involved in relevant services such as foreign exchange, travellers cheques and foreign currency acceptance etc. In addition, in an endeavour to enhance the Bank’s capabilities in serving foreigners, CCB launched the multi-language service functions in its call centres to provide service support in English, French, German, Russian, Japanese and Korean. Meanwhile, it cooperated with the Bank of America in developing a business in which ATM cash withdrawal handling fee would be mutually waived between the two banks. This allowed tourists and athletes holding Bank of America debit cards or credit cards to enjoy withdrawal services on CCB ATMs free-of-charge. 

Further Optimisation of Credit Structure and Continued Enhancement of Asset Quality 

During the first half of 2008, CCB continued to entrench reforms in its risk management system, adjusted its credit structure and raised the standards of refined management. These resulted in steady improvement in its asset quality.

 There was further optimisation in the customer structure for corporate loans. By 30 June, the balance of corporate loans granted to customer with internal credit ratings of A and above reached 89.50%, which was 0.89 percentage points higher than that at the end of the previous year. The effectiveness of CCB’s “Green Credit” project was in evidence. It has taken initiatives to retreat from lending to industries which were known for poor asset quality, excess capacity, high energy consumption and high pollution and which were not able to meet the Green Credit criteria. In the first half of the year, the balance of loans in the “opt-ed out” category was reduced by 31.876 billion compared to the end of the previous year. 

By implementing differentiated measures according to regions, products and customers, CCB focused on meeting the credit needs of premium personal customers. In the first half of 2008, the balance of personal loans reached 772.613 billion, which was 21.84% of the total amount of loans. Of these personal loans, personal residential mortgage loans witnessed an increase of 39.415 billion or 7.47% from the end of last year, while personal consumer loans saw a growth of 3.535 billion or 5.31% from the same period. 

Optimisation of risk management tools. In the first half of this year, CCB continued its optimisation of economic capital management and the implementation of risk limit management by industry. It had refined its economic capital quantification project, optimised respectively the probability of default for small enterprises, the risk exposure of some of its products, the installation of loss given default parameters, and the risk quantification of treasury business products. Originally, 20 some industries were under risk limit management; now it has been diversified to more than 50 industries, covering over 80% of CCB’s corporate loans. By implementing two-track control of economic capital limits and industrial loan limits, CCB has also raised the standard of its asset portfolio risk management. At the same time, CCB was the first among its counterparts in adopting a credit grading methodology based on a model of probability of default (PD). By monitoring the composition of the loan portfolio by industry on a real time basis and releasing information of such monitoring on a regular basis, the Bank was able to optimise the industrial loan structure and lower the extent of industry concentration risk. 

Strengthening of operational risk control and the introduction of business continuity management. Since this year, in order to prevent the occurrence of serious operational risks and offences, CCB has steadily introduced self assessment of operational risks and internal controls. In addition, it had stepped up the monitoring and inspection of critical risk points at the front-lines. Using Olympic-related services as a pivot, CCB introduced business continuity management measures by developing contingency plans for its key production systems and strengthend its emergency management. Concurrently, it kicked off the medium to long-term planning projects in an effort to establish a sound business continuity management system. 

Optimisation of risk monitoring measures and strong efforts in disposing of non-performing loans. In the first half of 2008, CCB further improved its early warning mechanism for risk monitoring of credit extension. For large credit customers, centralised risk assessment, follow-up and problem solving were implemented. Efforts were redoubled for the risk handling of customers with large special-mention loans, large non-performing loans or for the risk handling of key subsidiaries. Mechanism for risk handling of customers with large loan extension was established to expedite the disposal of non-performing loans. Research in new channels for the disposal of non-performing loans was carried out. For example, to dispose existing non-performing loans, CCB was the first among China’s banking industry in issuing the first securitised bond of non-performing assets amounting to 2.765 billion to handle non-performing loans. 

Strengthening of risk management of retail business. CCB has structured a professional risk management framework for all types of products and workflows of its retail business. It is the first bank among its national counterparts to develop an online scorecard system for its retail business based on a credit ratings model. The advanced system enabled automatic examination procedures for crucial retail credit business and the tracking and monitoring of the risks involved, and as well lifted the level of risk management in retail business.

The enhancement of credit structure and advancement in internal risk control together contributed to a continuous improvement in the overall loan quality of CCB. As of 30 June, 2008, the non-performing loan ratio and the balances of the non-performing loans in wholesale and retail trade, real estate and manufacturing industries, the three industries which CCB used to record higher non-performing loan ratios continued to decline and reported a drop of 2.38, 0.64 and 1.01 percentage points in their non-performing loan ratios respectively when compared to the figures at the end of 2007. 

Intensification of Cooperation with Strategic Alliances and Undertaking of Corporate Social Responsibility 

During the first half of the year, CCB not only intensified its cooperation with strategic investors, but also actively fulfilled its corporate social responsibility through providing financing services and donations for the relief of the earthquake in China and the reconstruction work after the earthquake. CCB has attained impressive results in all aspects. 

CCB has been deepening and widening its cooperation with strategic investors. With the assistance of Bank of America, branch transformation has continued. By the end of June, CCB had transformed 9,207 branches to provide marketing services, accounting for 68.69% of the total number of branches. The transformed branches recorded an improved average daily sales volume for 67%, 2.15 times of the sales volume prior to transformation. The average waiting time for customers has also been significantly reduced by 39%. In the first half of the year, CCB and Bank of America together designed a new sales and service process for its VIP customers in transformed branches. The advancement boosted up the average sales volume by 144% in pilot branches. To accommodate the latest trends and customer needs, CCB is conducting the second generation of branch transformation with good progress. In addition, CCB also cooperated intensively with Bank of America in developing products for small and medium enterprises, stabilising the online banking system and improving customer satisfaction. The Bank’s IT management, data management and risk control capabilities have been vastly improved through cooperative projects on IT planning, data governance as well as the scorecards for credit card and mortgage loan. 

Out of the 42 collaborative projects spanning retail business, corporate business, information technology, human resources management and risk management, CCB and Bank of America have completed 28 projects as of 30 June. For example, the “Voice of Customers” project has provided an important measurable guide for various departments and branches to improve their customer services, operations management and process design. Innovative responsibility systems for new products, quantified monitoring and assessment and the divisional decision-making model are being tested in different business areas. 

While achieving sound and rapid development of the Bank's businesses, CCB is highly concerned about its undertaking of corporate social responsibilities. After the severe earthquake in Wenchuan, Sichuan, CCB has donated 156 million to the disaster-stricken areas, of which over 86 million were donated by CCB staff and the “Special party fees” submitted by the members of the Communist Party of China amounted to over 47 million. Approximately 10,000 staff across CCB participated in voluntary blood donation and over 300 volunteers went to the disaster-stricken areas to offer rescue services to the victims.