Beginning from this year, ICBC continues to make efforts to meet the short-term funding needs of economic entities through various measures. Those include change on loan business philosophy, innovative approach to grow the trade finance business, support on the movement of goods that have the market and efficiency. By the end of August, ICBC has a balance of RMB 675.3 billion in trade finance, an increase of 38% from the beginning of the year. During the first eight months of this year, a total of RMB 1.11 trillion in trade finance facility has been granted, of which, RMB 566.7 billion is the in-balance sheet trade finance facility. This accounts for nearly 40% of the total liquidity loans released. Trade finance is now the main channel for ICBC to offer short-term loans to corporates.

To the domestic enterprises, there have been a lot of changes in advancing a business for the past few years. In light of the thriving trade activities and complex inter-relation between transactions, logistics and funds, customers desperately need trade finance services to meet the complex shortfall during a trade. In this respect, ICBC steps up its innovation efforts on trade finance products and services, improves service standard and looks for any business opportunity. The trade finance business of ICBC shows impressive growth.

The trade finance services and products launched by ICBC cover all the transaction steps from ordering, procurement, warehousing, production, sales and collection of receivables, an executive with ICBC said. ICBC trade finance services and products closely follow the cash flow, logistics and document flow and fulfill the individual funding requirement of the customers, showing strong adaptability and advantages. Just within this year, four new trade finance products (factoring for engineering projects, factoring for medical insurance, account payable financing, payment against domestic L/C) and a trade finance solution for branded automotive industry chain were launched. ICBC also moves aggressively on supply chain finance service. ICBC uses different product portfolio to offer supply chain finance solutions to the small businesses in the upstream and downstream of key enterprises and top projects. The solutions have addressed the funding gap in many small enterprises. More important, relative to the conventional liquidity loans which have high threshold and slow turnover, ICBC trade finance products allow companies to convert the account receivable into working capital in advance. Companies can then increase the efficiency in the use of funds. Companies can also raise their credit rating by the credit line given by ICBC in order to conclude the trade under lower risk. Besides, trade finance directly matches with the transactions focusing mainly on the flow of funds, which is very suitable for small and mid-sized enterprises (SME) with smaller scale, few collateral and pledge. SME welcome the flexible options available in loan tenor, facility amount, condition of use and guarantee. Statistics shows that ICBC has offered in-balance sheet trade finance facility to a tune of RMB 140.5 billion in January to August period this year, accounting for an increase of more than 100% against the same period last year.

Industry insiders commented that trade finance business is not only beneficial to the customers, but also carries significant implications to the Bank in many ways: adjustment of credit structure, improvement in risk control and earning more capital income. Before 2006, conventional liquidity loans were the major products of ICBC to address the short-term funding requirement of corporate clients. However, from January to August this year, the cumulative amount for in-balance trade finance facility rises to 39% of the cumulative amount released for general liquidity loans, resulting in better credit structure. Trade finance is the ultimate solution to eliminate the "capital" tied up by the company in the use of conventional liquidity loan. It also effectively addresses the difficult of managing the flow of loan because of the mismatch between liquidity loan and company's cash flow and logistic flow. Meanwhile, the bank can carry out closed management on the loan to companies by following the trade activity and settlement of funds. The use of loans can be strictly monitored to effectively stop credit risk. By the end of August this year, non-performing rate of in-balance sheet trade finance facility is 0.24%, where 0.20% stands for non-performing rate of domestic trade finance facility and 0.35% for international trade finance facility. All the percentages are on par with the international standard.