The principal activities comprise the provision of banking services, which includes RMB and foreign currency deposits, loans, payment and settlement services, and other services as approved by the CBRC, and the provision of related services by its overseas establishments as approved by the respective local regulators.
Business Review - For the year ended December 31, 2012
In 2012, we continued the transformation of our corporate banking business and focused on effective development while under capital constraints. We also accelerated the restructuring of our business and income structure and supported the development of major projects in China, such as key national infrastructure projects, projects for strategic emerging industries and projects for energy saving and environmental protection. In order to prevent and control risk in key sectors, we implemented industry-specific risk limit management and tightened controls on loans to Industries with high energy consumption, high pollution or overcapacity. We focused on innovation in marketing models and further extended our marketing efforts specifically towards leading enterprises. We provided comprehensive banking services by utilizing our cash management platforms and electronic banking systems to fully capitalize on our comprehensive service capability and advantages as a large scale bank. We conducted synergistic marketing to promote our products and services in trade financing, supply chain financing, syndicated loans and easy loans for small-sized enterprises, and also accelerated the establishment of synergistic marketing practices between corporate and retail banking, the Bank and its subsidiaries, and domestic and international markets and so on. The competitiveness of our branches in major cities was significantly improved as a result of the continuance of our strategy of accelerated reform and development of major city branches. We continued to optimize our three-level core customer tier-based management system, further refined our customer structure and improved our customer base. We upgraded our technology system and enhanced the functions of the corporate customer relationship management system. Moreover, we increased efforts to support SMEs and Micro Enterprises, especially focusing on those with businesses in line with China's industrial policies and have high growth potential.
We also expedited the establishment of specialized units to provide banking services to small-sized enterprises.
As of 31 December 2012, we had 2.94 million corporate banking customers, of which 76,100 had outstanding loan balances.
Corporate Loans and Deposits
In 2012, in response to the economic growth slowing down and the move forward liberalization of the interest rate, we accelerated innovation of our financial products and services, expanded and strengthened the relationship with our customers. We leveraged our advantage in comprehensive services and synergistic marketing to achieve a steady increase in corporate deposits. At 31 December 2012, the balance of our domestic corporate deposits reached RMB3,980,483 million, representing an increase of RMB336,921 million or 9.2% over the end of the previous year.
We refined our loan portfolio, reduced capital consumption, explored high-quality loan projects and cultivated valued loan customers. At 31 December 2012, our outstanding domestic corporate loans and discounted bills aggregated to RMB4,535,590 million, representing an increase of RMB443,475 million or 10.8% over the end of the previous year. Valued corporate customers accounted for 73.6% of the total number of our corporate customers. The proportion of loans to valued corporate customers amounted to 87.3% of total corporate loans, representing an increase of 3.77 percentage points over the end of the previous year.
During the reporting period, we strictly followed the macro-control policies on the real estate industry, controlled the total loans provided for real estate industry and refined the structure of real estate loans by region and by customer. We strengthened credit authorization management and postdisbursement management, and prevent risk related to real estate loans. At 31 December 2012, the balance of real estate loans to corporate customers amounted to RMB346,789 million, representing a decrease of RMB27,590 million over the end of the previous year. Real estate loans granted to customers of AA- grade or above amounted to RMB255,489 million, accounting for 73.7% of the total real estate loans to corporate customers. Non-performing loans amounted to RMB3,129 million, representing a decrease of RMB1,429 million over the end of the previous year. The nonperforming loan ratio decreased by 0.32 percentage point from the end of the previous year to 0.9%.
Small Enterprise Banking Business
In 2012, in response to the macro-economic downturn and the increasing pressure of the bounded credit risk, we adopted various measures to help small and micro enterprises solve their financing problems. We endeavoured to build specialized units on the ground and used them to form a banking service network for small and micro enterprises covering all cities and counties in China.
We also established specific credit plans for small and micro enterprises and formulated separate credit management policies, credit rating rules and risk pricing measures. We extended the scope of credit authorization and streamlined the credit application procedures for small and micro enterprises to realize ¡§one-stop¡¨ credit approval. We strengthened the research and development of products. In addition to existing popular products including ¡§Easy Loans¡¨, ¡§Self-Service Revolving Credit Facilities¡¨ and ¡§Factory Mortgage Loans¡¨, we also launched new products such as ¡§Bills Replacement¡¨ and ¡§Online Application¡¨, and facilitated SMEs obtaining direct financing from the offering of collective bills. As of the end of 2012, we had 43,497 small and micro enterprises customers. Loans amounted to RMB599,801 million, representing an increase of RMB121,178 million or 25.3% over the end of the previous year. The growth rate was higher than that of the total loans of the Bank by 11.2 percentage points.
In 2012, the Bank was awarded as ¡§Outstanding Services Financial Institution for Small and Micro Enterprises in China Banking Industry¡¨ by the CBRC, ¡§Most Competitive Bank for Small and Medium Enterprises in 2012¡¨ by China Association for Small and Medium Enterprises. We were also awarded as ¡§Top 10 Commercial Bank Supporting the Development of Small and Medium Enterprises in China¡¨ by China Association for Small and Medium Commercial Enterprises.
As of the end of 2012, we established agent cooperation with 121 banks. The third-party depositary services maintained a relatively rapid growth. We offered third-party depositary services to 98 securities firms for their transaction settlement funds, and the number of our contracted customers reached 13,429.8 thousand. The average daily balance of fund deposited amounted to RMB69,730 million. A total of 153 futures brokerage companies used our Bank-Futures Account System and 158 futures brokerage companies established cooperation relationships with us, with outstanding margin deposits amounting to RMB29.9 billion. Our banking-leasing cooperation developed rapidly and we established comprehensive cooperation relationships with bank-owned financial leasing companies. Balance of credit support reached RMB46.1 billion.
We improved our integrated banking services for state financial, livelihood and cultural sectors.
We set up ¡§Yin Cai Tong¡¨, ¡§Yin Guan Tong¡¨, ¡§Yin Yi Tong¡¨, ¡§Yin Cai Tong¡¨ and an information collection system for housing funds. We also accelerated the rapid growth in businesses, including financial agency service, corporate cards, social security cards, co-brand cards for housing funds, campus cards, agency services provided on the centralized payment of social insurance and provident funds. We strengthened cooperation with institutional customers in different sectors, such as science, education, cultural, health and irrigation sections, and the asset business maintained a steady growth. In 2012, the aggregate transaction volume of agency services provided to the treasury of the PRC central government amounted to RMB252,425 million, representing an increase of RMB31,682 million or 14.4% compared to the previous year.
Our presence in the bancassurance market continued to expand and the number of insurance companies using our bancassurance system reached 38. We collected new insurance premiums of RMB90,030 million and recorded a total income of RMB3,832 million from bancassurance this year. Our market share ranked first for three consecutive years among the Big Four banks in terms of revenue.
Settlement and Cash Management
Payment and Settlement
The Bank consistently strengthened its efforts on the marketing of settlement account services to corporate customers, and promotion of settlement package to SMEs and settlement card products to corporate customer. Through exerting efforts in marketing the settlement agency products, the number of third-party payment depository customers increased significantly and the scope of cooperation also expanded. As of the end of 2012, we had 3,717 thousand RMB-denominated corporate settlement accounts, representing an increase of 6.9% over the end of the previous year.
RMB-denominated corporate settlement transaction volume amounted to RMB289.34 trillion this year, representing an increase of 24.0% compared to the previous year.
We continuously expanded our target customer base of cash management service and consolidated the high-end customer base. We launched an express banking platform to enhance the services for Small-and Medium-sized Enterprises. The Global Cash Management Service Center (Hong Kong) commenced operation, so as to provide customers with comprehensive domestic and overseas services. As of the end of 2012, we had approximately 162 thousand cash management customers, representing an increase of 57.3% compared to the end of the previous year. Total transaction volume of cash management reached RMB108.13 trillion, representing an increase of 42.6% compared to the previous year. In 2012, the Bank was granted ¡§2011 Best Cash Management Case Award¡¨ by JRJC which is a financial website, and ¡§Best Cash Management Brand¡¨ by CFO World.
Trade Financing and International Settlement In 2012, the Bank overcame the effects caused by unfavorable external conditions, including weak growth of import and export and responded positively to the demand for trading and financial services in the market, we streamlined our trading business procedures and exerted our efforts in developing key products in trade financing under domestic letters of credit, trading financing for bulk commodities and receivables pool financing. As a result of our active promotion and development of innovative products, our cross-border RMB-denominated settlement business experienced a rapid growth. In 2012, the accumulated volume of international trade financing from our domestic branches amounted to USD133,955 million, representing an increase of 31.3% over the previous year. The total volume of international settlement conducted by our domestic branches amounted to USD671,306 million, representing an increase of 13.4% over the previous year. Our domestic branches issued an aggregate of USD14,385 million of letters of guarantee, representing an increase of 34.6% over the previous year. Cross-border RMB-denominated settlement totalled RMB384,451 million, representing an increase of 149.0% over the previous year.
In 2012, the Bank was awarded ¡§The Best Trade Financing Award¡¨ in the election of ¡§The Most Reliable Bank to CFO in China¡¨, and ¡§The Best Growing Trade Financing Bank¡¨ in the election of ¡§Outstanding Bank for Trade Financing¡¨ organized by China Banking Association.
In 2012, we proactively adjusted the development strategies of investment banking business in response to the changes in regulatory policies and market environment. In addition to maintaining the steady growth of investment banking business, we exerted effort in developing high-end investment banking businesses, including bond underwriting, syndicated loans, wealth management financing and Mergers and Acquisitions (M&A). We put great emphasis on restructuring of our business and enhancing quality of our services. In 2012, income generated from our investment banking business reached RMB14,501 million.
We issued 166 debt financing instruments with proceeds of RMB234,779 million. We acted as a lead manager and participated in 185 syndicated projects this year and outstanding syndicated loans amounted to RMB385,115 million. Besides, we supported M&A of medium- and large-sized enterprises and approved 17 M&A loans this year, with new M&A loans amounting to RMB14,336 million. We developed our credit asset-backed securitization business and proactively expanded pilot programs for credit asset-backed securitization. Furthermore, we closely followed the energy saving and emission reduction and green development policy formulated by the government, and fully leveraged on and further developed advantages in the innovation of green banking. Two Clean Development Mechanism (CDM) projects, which we provided consultation services to, registered in the United Nations successfully, representing a breakthrough of large commercial banks in China in this sector. We were the first provider of the new products including ¡§Certification Emission Reduction (CER) resale consultation¡¨ and ¡§Energy Management Contract (EMC) consultation and financing¡¨ in the banking industry of China.
We were awarded the ¡§Best Investment Bank¡¨, ¡§Best Bank of Syndicated Financing¡¨, ¡§Best Bank of Financial Advisory¡¨, ¡§Best Debt Financing Project¡¨ and ¡§Best Short-Term Commercial Paper Project¡¨ in the election of the best investment banks in China by Securities Times in 2012. We were also awarded ¡§Best Syndicate Development¡¨ and ¡§Best Deal of Syndicate¡¨ by China Banking Association in its Annual Award Selection Event. We were also awarded the ¡§Best Investment Banking Business¡¨ in the sixth election of the Most Reliable Bank to CFO organized by CFO World.
As of the end of December 2012, we had RMB2,973,802 million of assets under custody, representing an increase of 43.0% over the end of the previous year. Among them, insurance assets under custody amounted to RMB1,344,992 million, representing an increase of 17.3% over the end of the previous year, ranking first among all commercial banks in China. In 2012, our custodian and other fiduciary service fees amounted to RMB2,495 million, representing an increase of 49.2% compared to the previous year.
In 2012, we won the bids for a number of pension fund projects of several well-known enterprises, actively promoted the integrated schemes for corporate annuity and expanded our custody business for the new rural pension insurance fund program and various social security funds steadily to enhance the diversification of our pension business. As of the end of this year, pension funds under our custody reached RMB167,908 million, representing an increase of 26.1% over the end of the previous year.
In 2012, in response to the changes in macro-economic and market demand, we emphasized on developing retail banking business in the strategy of the Bank, accelerated our retail banking business transformation and put effort to become a first-class retail bank in China. We implemented the ¡§Year for Further Improvement of Service Quality¡¨, conducted consultation on the transformation of our outlets and strengthened the supervision on the service quality of outlets to improve customers' experience and satisfaction effectively. We adopted sophisticated customer management and enhanced the training of employees of retail banking business. We also carried out the ¡§2111¡¨ project in relation to the management of customer information data, and established a new system for retail banking customer relationship management. The marketing services platform for VIP customers was also strengthened to enrich our value-added services. We strengthened the synergistic marketing of retail banking products as well as the synergistic marketing between corporate and retail banking business. We expanded our customer base effectively and improved our capability of identifying customers and exploring their potential value. Targeting to enhance the core competitive edge of our retail banking business, including retail deposits, retail loans, bank cards and private banking, we speeded up the development of innovative products and promotion of financial products.
As of the end of 2012, we had over 409 million retail customers, ranking first among all large commercial banks, and among which we had more than 15,000 thousand VIP retail customers. We had over 14,000 domestic Associate Financial Planners (AFP), over 1,900 international Certified Financial Planners (CFP) and more than 600 Executive Financial Planners (EFP), maintaining a leading position among all commercial banks in China.
In 2012, we grasped the opportunities brought by the guidelines of the government policies to expand domestic demand and encourage consumption and implemented the strategy to prioritize developing retail loan business. Apart from strengthening risk management, we increased lending to retail customers. As such, the retail loans business maintained a steady growth. At 31 December 2012, the balance of domestic retail loans reached RMB1,707,323 million, representing an increase of RMB276,803 million or 19.3% over the end of the previous year.
In 2012, we enhanced the differential housing credit policies in compliance with the national macro-control polices in the real estate market, and satisfied the financing needs of households to purchase first common commercial house for their own use. Grasping the opportunities brought by the escalating trend of urbanization, we expanded residential mortgage loans business in central and western China and coordinated the development of different regions. We provided support to residents for settling down in new towns to take advantage of the new pattern of urbanization.
Moreover, we refined the risk pricing mechanism and implemented differential pricing of retail loans. We refined product design, improved customer experience and promoted products including residential loans secured by mortgages and loan credits based on salary level according to government policies which aimed to stimulate consumption and expand domestic demand. In response to policies of the government to support the development of small and micro enterprises, we extended more credits to small and micro enterprises. We improved our capabilities of serving for real economy by enhancing wholesale marketing, synergistic marketing and targeted marketing.
In 2012, we launched a credit service project named ¡§Hundreds of the Best and Thousands of the Excellences¡¨, which was offering start-up loans, loans for shop rental, ¡§Ka Jie Dai¡¨ and self-service revolving loans to hundreds of private enterprises in major specified markets or business circles.
In 2012, our centralized operation of retail loans had an in-depth development and our services have been more specific. Our brand value further improved and our ¡§Jin Yao Shi ¡E Hao Shi Dai¡¨ was upgraded and renamed as ¡§Hao Shi Dai¡¨, which became an exclusive brand of our retail loan business. We were awarded ¡§Retail Loans Provider with Outstanding Competitiveness¡¨ for three consecutive years till 2012. ¡§Bao Jie Dai¡¨ was selected as ¡§Top 10 Financial Products Innovation Award¡¨ in ¡§2012 Financial Services Innovation Award in China¡¨ jointly organized by Chinese Academy of Social Sciences (CASS) and The Chinese Banker.
In 2012, the PBOC continued to implement prudent monetary policies, which were fine tuned in a timely and appropriate manner when necessary. Under such measures, the liquidity remained stable and loose and the liberalization of deposit interest rate was in steady progress. According to the changes in macro-economic condition, we proactively altered the development plan of our liability business, enhanced the customer relationship management, developed and refined our retail products portfolio, and improved the functions of managing retail deposit accounts. The retail deposits recorded a steady growth. At 31 December 2012, the balance of domestic retail deposits reached RMB6,421,876 million, representing an increase of RMB795,799 million over the end of the previous year.
As of the end of 2012, the number of debit cards issued amounted to 550 million, representing an increase of 88 million over the end of last year. The number of debit IC cards issued amounted to 21,898.4 thousand. The transaction volume of debit cards amounted to RMB3,799,888 million, representing an increase of 33.2% over the previous year. As of the end of 2012, the number of credit cards issued amounted to 36.98 million and our dedicated merchants of credit cards amounted to 584 thousand. The transaction volume of credit cards amounted to RMB630,670 million, representing an increase of 33.8% compared to the previous year.
We strengthened the brand building of Kins card, accelerated the research and development and promotion of debit IC cards and enriched the product lines of debit cards. We launched Corporate Kins Card, security cards for soldiers of armed police force and funding cards for high school students. We also organized ¡§Debit IC Cards Forum for Senior Management¡¨, which was the first forum in the banking industry in China. We rolled out the first IC credit cards featuring QQ in China, Kins and Han Ting Hotel Eastern Miles Co-brand Card and Kins and Mangocity Co-brand Credit Card to broaden the types of credit cards. We also organized marketing activities for credit cards throughout the year, and held activities for London Olympic, health seminars and travel promotion activities, which increased the utility rate of credit cards effectively. We continued to expand the credit card instalment payment business by extending instalment periods and optimizing the variety of instalments. We also actively developed third-party payment channels for credit cards.
Agency Distribution of Fund Products
In 2012, to celebrate the tenth anniversary of the business of agency distribution of fund products, we started a marketing activity namely ¡§The Grateful Decade of Jijinbao¡¨. Moreover, we further enhanced our market competitiveness and developed our distribution of fund products steadily through integrating sales channels, strengthening the team building of employees and improving the quality of customer service. In 2012, we distributed fund products with a total transaction volume of RMB234,422 million, representing an increase of RMB132,885 million over the last year and received fees and commissions of RMB796 million.
Agency Sales of PRC Government Bonds
In 2012, we acted as an agent for the issuance of 17 batches of saving treasury bonds, among which, 3 batches of certificated saving treasury bonds with actual sales of RMB8,618 million and 14 batches of electronic saving treasury bonds with actual sales of RMB16,572 million. We were granted the award of ¡§Outstanding Underwriters of PRC Government Bonds in Book Entry Form¡¨ by the MOF and the PBOC in 2012.
Private Banking Business
As of the end of 2012, we established the private banking departments in 19 domestic branches. The number of customers of private banking business reached 35 thousand and the assets under custody amounted to RMB396 billion.
During the reporting period, we grasped the opportunities brought by the transformation of retail business and enhanced services to provide each of our high-end customers with a specific customer manager, wealth management consultant and wealth management plan. We integrated resources and established a diversified product platform to satisfied wealth management demands from customers with exclusive wealth management products, investment products and tailor-made products. We also strengthened the synergy between corporate banking and retail banking so as to refine the financial services to private banking customers, including cross-broader financial services, exclusive credit services, legal and tax consultation services and integrated financial services for corporate shareholders. We strengthened the information technology support and accelerated the establishment of trading system, management system and channel system. Furthermore, we expanded individualized value-added services, including artwork financing, high-end business travel and tailor-made orders of diamond products.
In 2012, although the recovery of the global economy was slow and difficult, the growth of China's economy continued at a modest and steady rate. Persisting in prudent operation, we proactively adjusted our investment strategies, rolled out product innovation, developed wealth management business and improved our risk management. Our operation efficiency of assets was further enhanced.
Money Market Activities
In 2012, the PBOC adopted prudent monetary policies and lowered the statutory deposit reserve ratio and benchmark interest rates for deposit and loans twice. The floating ranges of exchange rate and interest rate were further enlarged. The PBOC suspended to issue notes in the open market, and normalized the reserve-repurchase operation. The liquidity of RMB capital was tight balance and the high interest rate in monetary market in the beginning of the year was in a downward tendency with fluctuation. We enhanced prospective market studies and monitoring in order to improve our fund profitability and efficiency while ensuring our liquidity. In 2012, our domestic RMBdenominated financing transaction volume amounted to RMB15,721,913 million, including lending of RMB13,810,029 million and borrowing of RMB1,911,884 million. The total financing volume recorded an increase of 51.3% compared to the previous year.
We continued to adopt a prudent strategy for short-term foreign currency investment and closely monitored the changes in credit level of overseas counterparties.
Investment and Trading Activities
At the end of 2012, our net investment securities and other financial assets amounted to RMB2,851,448 million, representing an increase of RMB223,396 million compared to the end of the previous year.
In 2012, the yield in bond markets was more fluctuated. We closely monitored the movement in bond market and adjusted our management strategies of trading portfolios dynamically. The yield of bonds in trading book surpassed the yield of the market index by 3.8 percentage points and the RMB-denominated bond trading volume amounted to RMB982,723 million in 2012.
Banking Book Activities
In 2012, the yield of major products by maturity term in RMB-denominated bonds market recorded a slight increase generally with violent fluctuation. Based on the prospective analysis and the tendency judgments of interest rates, we adjusted the portfolio and maturity structure of new investments dynamically, proactively increased investments, so as to improve the yield of the investment portfolio effectively. We continued to optimize the investment portfolios of government bonds, financial bonds issued by policy bank and corporate bonds and increased the proportion of bonds issued by policy banks and corporations with better risk-return ratio. At the end of 2012, the balance of our RMB bond investments in banking book reached RMB2,616,309 million.
Treasury Transactions on Behalf of Customers
We actively involved in developing foreign exchange market in China, continued to optimize the business structure of the exchange settlement and encouraged the development of foreign currency trading. We put efforts into product innovation and continued to strengthen our risk control. In 2012, the transaction volume of our RMB exchange settlement on behalf of customers reached USD232,698 million, and that of foreign currency trading on behalf of customers amounted to USD10,580 million. In 2012, we were awarded five prizes for excellent inter-bank foreign exchange market makers by the China Foreign Exchange Trading System, namely ¡§Best Spot Market Maker¡¨, ¡§Most Disciplined Spot Market Maker¡¨, ¡§Most Progressive Market Maker¡¨, ¡§Best Market Maker on Back-end Support¡¨ and ¡§Best Market Maker for Foreign Currency Pairs¡¨.
Retail Wealth Management
Facing intense competition among the banking industry and non-bank financial institutions, such as brokerage firms and fund management companies, we focused on both regulation and development, and accelerated retail wealth management business. In 2012, we issued retail wealth management products of RMB3,655,794 million. As of 31 December 2012, the balance of our retail wealth management products amounted to RMB334.4 billion and our market share was further increased.
In 2012, we introduced semi open-ended wealth management products in addition to the openended wealth management products, and improved or launched equity wealth management products and physical wealth management products based on the bond products in order to satisfy the diversified wealth management needs of customers. Our proprietary wealth management products were recognized as the ¡§Wealth Management Brand of the Year¡¨ in the 2012 China Business News Financial Brand Ranking, and was awarded the ¡§Top 10 Best Banking Wealth Management Products in China in 2012¡¨ and the ¡§Best Team of Design and Innovation of 2012¡¨ in the election of the Most Respected Bank and Best Retail Bank Contest in China in 2012 hosted by Money Week. Our proprietary wealth management products were also the winner of the 5th China assets management ¡§Golden Shell Awards¡¨, that is the ¡§Best Risk Management Banks Award of 2012¡¨, at the 2012 China assets management awards ceremony held by 21th Century Business Herald.
Corporate Wealth Management
In 2012, we issued corporate wealth management products of RMB1,401,157 million and the business scale further increased. As of 31 December 2012, the balance of our corporate wealth management products amounted to RMB133.0 billion. Our products such as ¡§An Xin Kuai Xian¡¨ open-ended series products, ¡§Ben Li Feng¡¨ corporate series products, ¡§An Xin De Li¡¨ corporate series products, ¡§Hui Li Feng¡¨ corporate series products and ¡§KaiYang¡¨ equity series products gained positive feedback from customers for their stable yields and flexible maturities. The number of contracted customers for wealth management further increased.
Accounting and management of off-balance sheet wealth management products
The accounting and management of the off-balance sheet wealth management products of the Bank were in compliance with the PRC accounting standards and relevant regulations. Funds from our off-balance sheet wealth management products were all under custody. We prepared separate operating reports for each of the asset portfolio. We continued to improve the investment management of off-balance sheet wealth management products, properly assigned the maturity structure of their assets and liabilities, and imposed strict measures to manage market risk. All of the off-balance sheet wealth management products issued and redeemed during the reporting period achieved the expected yield.
Precious Metal Business
In 2012, the prices of gold and silver in the international market were generally volatile in a range and the difference between the domestic and international prices narrowed down, which reduced the trading opportunities. We endeavoured to trade in the Shanghai Gold Exchange, the Shanghai Futures Exchange and overseas over-the-counter market. In 2012, we traded 451 tons of gold and 2,982.41 tons of silver for our own account and on behalf of customers. The income of precious metal business was RMB1,051 million, representing an increase of 38.3% compared to the previous year. In 2012, we carried out precious metal leasing and hedging businesses and promoted the sales of physical precious metals. The business volume of the precious metal leasing business and the sales volume of the physical precious metals increased by 480.1% and 33.4% respectively compared to the previous year. In 2012, we launched the client terminal for agency trading system of the Shanghai Gold Exchange for our retail precious metal transaction business and completed the preparation for the operation of retail under-account precious metal transaction system, which
further broadened the product lines of precious metal business. In 2012, we won the Outstanding Member Award by the Shanghai Gold Exchange and ¡§Enterprises with Top 10 Gold Trading Volumes¡¨ by the China Gold Association.
In 2012, aiming at stabilizing township outlets, adjusting county area outlets and optimizing urban outlets, we continued to refine our branch outlets layout, implement standardized transformation and reconstruction of branch outlets and enhance marketing capabilities effectively. We completed the relocation of 1,140 branch outlets, the standardized transformation and reconstruction of 3,701 branch outlets in 2012. As of the end of 2012, we had 17,308 branch outlets with specific functional zones, representing an increase of 2,707 compared to the end of previous year.
We put great emphasis on targeting the Bank as a ¡§Smart Bank¡¨ featuring comprehensive account management, flexible fund procurement, easy investment and wealth management and safe technical support with a service system covering five major online financial services, namely Internet banking, telephone banking, mobile banking, self-service banking and E-commerce banking to offer interconnection, keen insight, intelligent response and user-friendly experience. The Bank was endeavored to breaking through the time and space limitation and providing flexible, effective, convenient and secured customized services to our customers. In 2012, we completed 31,653 million electronic transactions, representing an increase of 50.1% over the previous year, accounting for 67.8% of our total number of transactions, representing an increase of 5.19 percentage points over the previous year. Our efforts were recognized by numerous awards, including ¡§Top 10 User Favourite Electronic Finance Brand¡¨ by China E-Commerce Association and ¡§Most Innovative Electronic Banking Award¡¨ by China Business News.
We adopted the most advanced Internet technology to consolidate and enhance Internet banking functions, enrich Internet banking application, streamline the business processes, and improve our customers' experience. In 2012, we optimized the operating environment of retail Internet banking system and improved the sale system of wealth management products via retail Internet banking. We also developed new functions of foreign exchange transactions for retail Internet banking and launched retail Internet banking for Hong Kong branches. As of the end of 2012, we had 88.37 million retail Internet banking customers and total transaction volume for our retail Internet banking amounted to RMB72.64 trillion.
We continued to refine and upgrade our corporate Internet banking system, comprising the Zhixin Version, Zhirui Version, Zhibo Version and Zhiyi Version. We optimized the functions in businesses such as wealth management, foreign exchange transactions and supply chain financing, and provided differentiated services to various customers including micro-, small-, medium-, and large-sized enterprises as well as conglomerates. At the end of 2012, we had approximately 1,900.1 thousand corporate Internet banking customers and the total transaction volume of our corporate Internet banking was RMB54.26 trillion in 2012.
We continued to build our portal websites and refine the visual application and interactive effects of portal websites. We also supported overseas branches establishing sub-sites to expand the coverage of our portal websites, so as to increase the influence of the portal websites. During the reporting period, the click-through rate of our portal websites exceeded 4.4 billion, representing an increase of 31.0% over the previous year and ranking top among banks in China.
In 2012, we formulated the plan for the establishment of centralized customer service system, speeded up the establishment of ¡§new-generation¡¨ customer service platforms and upgraded our customer service systems. We refined our telephone banking functions and speeded up the trials of telephone banking call-out business. During the reporting period, we received 435 million calls via our 95599 customer service center and 52.73 million calls via our manual customer service.
In 2012, we launched the ¡§Mobile E-banking¡¨ series of mobile banking products and the mobile banking client series. We added wealth management products to mobile banking, upgraded the versions and functions of mobile banking, and enriched the value-added functions of mobile banking. Moreover, we speeded up the integration of electronic banking channels, explored new mode for County Area mobile banking business and carried out pilot scheme of mobile payment in County Areas. At the end of 2012, our mobile banking Internet business had 56.85 million customers and the transaction volume amounted to RMB421,084 million in 2012. We also had 149.43 million customers contracted for our mobile banking SMS business with a total of 6,480 million short messages sent to the contracted customers in 2012.
In 2012, we proceeded with the construction of the integrated platform for self-service facilities and completed the installation of the first phase of management and monitoring system of self-service facilities and the first phase of Zhifutong in the Bank. We also refined the application approval procedures for cash-related self-services banking of financial IC cards. Furthermore, we extended the application of self-service banking facilities by increasing self-service banking facilities in villages and towns to facilitate the ¡§Huinongtong¡¨ project. As of the end of 2012, we had 76,234 cash-related self-service banking facilities, with a total transaction volume in 2012 amounted to RMB8.77 trillion. We had 34,314 self-services terminal facilities, with a total transaction volume of RMB6.93 trillion in 2012. We had 3.18 million Zhifutong machines, with a total transaction volume of RMB8.97 trillion in 2012.
In 2012, we carried out trials of new e-commerce payment platform and promoted the online ¡§K-code payment products¡¨ and cross-bank payment products. We provided various payment methods, including ¡§Mobile WAP Payment¡¨ and ¡§Phone Wallet Payment¡¨ through different platform products, such as the B2C general payment platform, the B2B general payment platform, the direct sale of funds payment platform and the online trade market payment platform. As of the end of 2012, our merchant's network had a total of 5,850 members with a transaction volume of RMB654,891 million in 2012.
Business Outlook - For the year ended December 31, 2012
Looking forward to 2013, it is expected that the global economic recovery will be moderate and the economy will grow at a slow pace. The monetary policy will remain relaxed and governments will continue to focus on fiscal consolidation, resulting in lower systematic risk in the market. In particular, the Chinese government has further identified development plans for new industrialization, informatization, urbanization and agricultural modernization, which will have a profound impact on China's economic growth patterns and trends. It is expected that the Chinese government will persist in its proactive fiscal policies and prudent monetary policies in 2013. Under the influence of economic cycle and government policies, it is expected that the growth of infrastructure investment in China will accelerate and consumption growth will pick up steadily. Foreign trade is expected to be stable and the economy growth will hopefully stabilize and keep recovering. As urbanization development is expected to achieve a breakthrough, the foundation of agriculture will be consolidated, and more favourable and preferential policies for strengthening and benefiting agricultural industry, rural areas and rural households will be launched, bringing strategic opportunities for the development of economy in County Areas as well as our County Area Banking Business. It is expected that the monetary and regulatory environment will remain stable in the Chinese banking industry. The business transformation of the banking industry will be boosted by the implementation of the New Basel Accord, acceleration of financial disintermediation and liberalization of interest rates and the development of Internet financial businesses.
Source: ABC (01288) Annual Results Announcement
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