Q China Construction Bank (CCB) has been mainly a domestic bank up to now. How will you change strategy and move abroad?

A We have to follow our customers and we have to provide international financial services. China’s economy is global and we need to diversify our business and income as only 2% of our business comes from overseas. We need to diversify, go abroad and establish new branches.


At present we have six branches abroad and two independent companies in Hong Kong; one an investment banking arm and a branch. We also have branches in Frankfurt, Johannesburg, Seoul, Singapore, and Tokyo.

In 2008 we are looking for a franchise in London or a subsidiary and also two operations in the Middle East, in Dubai and Qatar. We have already had approval from the China Banking Regulatory Commission to open branches in New York and Vietnam, and we plan to open a new representative office in Australia.

Our targets are to diversify income and build services overseas for customers. We have a very flexible strategy – we may go for 10% to 20% stakes so we can gain expertise or we may go for more than 50% if possible. For foreign banks we can provide good opportunities in China and we also can get their customers, providing a win-win situation for all. Reports that CCB is interested in acquiring part of the 17% stake in Standard Chartered Bank owned by Singapore’s Temasek are only rumours.

Q CCB is reported to have a higher return on assets and equity than the other Chinese banks. Why has CCB done so well, and what differentiates it?

A Last year was a bumper year. We were able to increase retail dramatically and we were also able to provide a 100% increase in fee income. In terms of lending, new loans in retail rose by 40% and the growth in lending to small and medium-sized businesses was larger than growth in corporate lending.

A key growth factor was also the growth in investment banking business. The market was very good in sales of shares and securities. Sales of unit trusts increased by more than 700% in the first half of 2007, and this continued in the second half, providing strong fee income. However, it was not only fee income on share transactions but on transactions overall. We decided on a big increase in ATMs in 2007, increasing our number by 7000 to a total of 25,000. We are now a big market player with 20% of the market in ATMs, and this is very important because consumption is very big, much bigger than reported.

Consumption has increased dramatically but this increase is underestimated because of bad reporting of services in the system of national accounting. Today, 80% of people living in China’s cities own houses, a higher figure than in the UK, but the system of national accounts is not accurate. The dramatic increases in debit card and cash transactions through consumption are bigger than reported. There is clear growth in credit and credit cards but banks need to pay more to attract deposits. China is not over-banked.

CCB has a 12% market share in deposits and lending, much less than, for example, HBOS in the UK, which has a 24% market share. There is room for growth in this consumption phase for improved productivity. One ATM can replace two to three tellers in big city operations.

Q How do you perceive CCB’s prospects for 2008?

A We can manage risk well, and diversifying more into ATMs has been a smart move. We see future growth in retail, construction (where we are number one), infrastructure and energy. After the bumper year of 2007, this year is hard to predict. Gross domestic product growth will slow, and in financial services the growth level is unpredictable. Fee income from capital markets may not grow as much as in 2007. About 4000 of our 13,000 branches will become business centres, reducing waiting times and improving services. With the help of 50 expatriates from Bank of America (which paid $3bn for a 9% stake in 2005) progress has been made in risk, retail and asset management projects.

Curriculum Vitae

Guo Shuqing

2005 China Construction Bank, Chairman

2001 State Administration of Foreign Exchange, Director

1998 People’s Bank of China, Vice-Governor