The Industrial and Commercial Bank of China (ICBC) said it would issue a dual-currency credit card carrying the logo of financial services giant American Express to Chinese consumers.

ICBC, the country's largest commercial bank, inked a co-operation agreement with American Express Co in Beijing yesterday.

But the contents of the agreement have yet to be approved by the China Banking Regulatory Commission, the industry watchdog.

"We hope that in the autumn of this year, we will be able to issue the cards," said David House, group president of American Express.

The agreement points to American Express' long-term commitment to the Chinese market, House said.

ICBC President Jiang Jianqing said he hoped to issue at least 4 million credit cards with the American Express logo in the next 10 years.

Jiang said his bank would give key emphasis on development of the bank card business, as it is an important segment of the non-interest business, which Chinese commercial banks will try to expand in the coming years.

"We plan to earn at least 3.3 billion yuan (US$397 million) from the bank card business this year," he said.

In total, the bank will try to earn 10 billion yuan (US$1.2 billion) from non-interest business in 2004, jumping from about 7 billion yuan (US$843 million) last year.

"There is no problem in the ICBC earning 70 billion yuan (US$8.4 billion) in operating profits this year," he said.

Last year, the bank's profit came in at 62.1 billion yuan (US$7.5 billion), a jump of 40 percent from the previous year.

Experts say bigger profits are greatly needed by the bank which plans to complete its joint-stock restructuring and get ready for an initial public offering by the end of 2006.

An ICBC spokesperson said earlier that the reform plan is being reviewed by the relevant authorities.

The ICBC is widely expected to become the third of the four-largest State-owned commercial banks to list on the stock market.

The Bank of China and China Construction Bank were chosen late last year for a pilot reform package designed for the big four banks, and received a total US$45 billion in capital to boost their capital bases.

The two plan to list no later than next year, while the Agricultural Bank of China, the last of the big four, has scheduled its listing for after 2006.

The ICBC is currently grappling with two major problems hindering its reform - high non-performing loans (NPLs) and poor corporate governance, the spokesperson said.

The bank aims to achieve 240 billion yuan (US$28.9 billion) in operating profits in three years.

It also plans to dispose of 300 billion yuan (US$36.1 billion) in non-performing loans (NPL) during the same period, so as to bring its NPL ratio down to less than 10 percent.

The NPL ratio is expected to be reduced to 18 percent at the end of this year, the spokesperson said.

The ICBC, after years of reform, has entered a new phase with high growth in profits and the rapid decline of non-performing assets, he said.

The bank earned a total of more than 150 billion yuan (US$18 billion) in operating profits in the past four years, he said.

About 90 percent of these profits was used to write off bad loans in a bid to strengthen the base for future development, the spokesperson said, slashing the NPL ratio to 21.3 percent at the end of last year.

The ICBC's NPL ratio peaked at 47.5 percent in June, 1999, shortly before four asset management companies were set up and took over a total of 1.4 trillion yuan (US$169 billion) worth of NPLs from the big four.

Out of the 2.1 trillion yuan (US$253 billion) of loans the bank lent after 1999, or 64 percent of its total outstanding loans, the non-performing part accounts for a healthy 1.55 percent.

Non-performing loans created after 2000 totalled 17.4 billion yuan (US$2 billion), or 0.86 percent of total lending during the same period.

(China Daily March 31, 2004)