Hong Kong Immigration perspective on doing business in Hong Kong: "In our global overseas business development, we have specifically proposed building Hong Kong into a bridgehead for our overseas operations." Bank of China President Chen Siqing recently stated at the interim results briefing that the integration of certain ASEAN operations into BOC Hong Kong is being actively advanced.
In fact, it is not just the Bank of China; currently, large Chinese commercial banks are continuously strengthening the personnel and resource integration of their institutions in Hong Kong. Against the backdrop of pressure on domestic profit growth, more and more Chinese-funded banks are viewing overseas business as a "profit engine," and Hong Kong has become a key point for competing for overseas business.
As 16 A-share listed banks have delivered their "mid-term" results, "slight growth" in profits has become a common trend for all banks. Among the "Big Four" banks, except for the Bank of China, which saw a slight net profit increase of 1.69%, the others have fallen below 1%, with the Agricultural Bank of China ranking last with a growth rate of 0.5%. Banks have attributed the slowdown in profit growth to "continued significant downward pressure on the domestic economy," which has led to weak profitability.
In contrast, thanks to internationalization and comprehensive development, the overseas institutions of major banks have maintained a relatively high growth rate. The semi-annual reports show that in the first half of the year, China Construction Bank's overseas investment banking achieved financial advisory revenue of 3.068 billion yuan, and its overseas commercial banking achieved a profit of 2.118 billion yuan, a year-on-year increase of 35.61%; the Agricultural Bank of China's overseas branches and holding institutions achieved a net profit of 1.812 billion yuan in the first half, a year-on-year increase of 22.8%; the Industrial and Commercial Bank of China's overseas institutions achieved a pre-tax profit of 1.706 billion yuan, a year-on-year increase of 13%; and the Bank of China's overseas institutions achieved a pre-tax profit of 4.652 billion US dollars, accounting for 22.91% of the group's pre-tax profit.
ICBC President Yi Huiman stated that ICBC must strengthen the global coordination and allocation of resources, accelerate the extension of core products overseas, and further improve the level of international operations and contribution to the group's profitability.
However, recent frequent fluctuations in domestic and international capital markets have posed more challenges to the overseas strategies of Chinese-funded banks. In particular, the recent volatility in the RMB exchange rate has affected multiple offshore RMB trading centers, including Hong Kong, where significant exchange rate fluctuations have caused a tightening of offshore RMB liquidity and a slowdown in the growth of the RMB capital pool.
"With the continuous advancement of RMB internationalization, the liquidity of the offshore RMB market will improve accordingly. There is no basis for a sustained depreciation of the RMB exchange rate, and cross-border RMB remains a major highlight for the development of overseas business for Chinese-funded banks," said Mao Yumin, President of CCB (Asia), a wholly-owned overseas subsidiary of China Construction Bank.
The benefits of RMB internationalization for the development and profit growth of overseas business for Chinese-funded banks are obvious. Bank of China Vice President Zhang Jinliang stated that Chinese-funded banks can seize the rare opportunity of the recent RMB exchange rate reform to actively develop offshore RMB intermediary business through international settlement and cross-border RMB settlement.
The semi-annual reports show that in the first half of the year, the Bank of China's cross-border RMB settlement volume was 2.63 trillion yuan, and its cross-border RMB clearing volume was 148 trillion yuan, a year-on-year increase of 31.6%; ICBC's cross-border RMB business volume was 1.99 trillion yuan, a year-on-year increase of 16.5%.
In addition, by riding the express train of two-way investment such as the "Shanghai-Hong Kong Stock Connect" and mutual recognition of funds, the cross-border RMB business for private clients of Chinese-funded banks in Hong Kong will also see good development prospects.
"RMB internationalization is an inevitable trend. Recent exchange rate fluctuations will not hinder this process. The increasingly robust demand for overseas operations and investments by enterprises and individuals will inevitably accelerate the cross-border use of the RMB," said Hu Zhanghong, Chairman of CCB International. He added that under the premise of effective risk control, overseas institutions should promote RMB product innovation to provide more comprehensive supporting services for enterprises "going global" and for the outflow of RMB capital.
RMB internationalization is aligning with the pace of Chinese enterprises "going global," helping growth-oriented enterprises to "go global." As Chinese-funded banks promote integrated development at home and abroad, their competitiveness continues to improve, and more and more large-scale international syndicated loans are being led and arranged by Chinese-funded banks.
"CCB Asia alone has completed 18 syndicated loans in the first half of the year, with a commitment of 12.8 billion yuan," said Mao Yumin. In recent years, overseas institutions have actively cooperated with the integration of domestic and foreign resources, focusing on both cross-border services and linkage services. Chinese-funded banks in Hong Kong are actively seizing the opportunities of Free Trade Zones, using internal and external linkages to expand the "going global" market, and bringing Hong Kong's relatively mature experience and regulations to the Free Trade Zones.
With the recent suspension of A-share IPOs, many Chinese enterprises with financing needs have turned to the Hong Kong stock market for listing. Furthermore, since last year, the Hong Kong bond market has been active, and the issuance of RMB-denominated corporate bonds has surged, bringing many opportunities to Chinese-funded investment banks in Hong Kong. CCB International has recently successfully completed multiple key projects, including those for Guangzhou Shipyard International, China Three Gorges Corporation, China National Nuclear Corporation, and Zhongzhou Securities, and has supported financial innovation in Free Trade Zones such as Qianhai.