In Depth: Returning to Its Roots Pushes China’s Agricultural Bank Up the Ranks

Agricultural Bank of China Ltd. (ABC), listed as 601288.SH, has significantly outperformed its peers among China's “Big Four” state-owned commercial lenders in recent years, buoyed by government policy emphasizing inclusive finance. As a result, ABC advanced from being the third-largest by assets to second place by the end of 2023, overtaking China Construction Bank Corp. (CCB, 601939.SH) and pushing Bank of China Ltd. (601988.SH) into fourth place. Additionally, ABC led the Big Four in profit growth over the past two years and was the only one to achieve year-on-year profit growth in the first quarter of the current year. Its stock price surged by 40% in 2024, far exceeding gains by its major competitors. Despite these improvements, ABC’s total assets of 47 trillion yuan ($6.6 trillion) at mid-2024 still lagged behind sector leader Industrial and Commercial Bank of China Ltd. (ICBC, 601398.SH), which maintains a lead of approximately 5 trillion yuan. This strong performance has prompted ICBC to consider measures for bolstering market value and investor confidence, including appointing its first chief financial officer (CFO) to focus on cost control and efficiency improvements [para. 1][para. 2][para. 3][para. 4][para. 5][para. 6].

ABC’s rise is closely tied to China’s inclusive finance initiative, which aims to extend accessible, affordable financial services and loans to farmers, rural communities, and the broader agricultural sector—a central component of China’s strategy to revitalize rural areas by 2050. Since 2018, the performance of state-owned banks has been evaluated partly on their contribution to inclusive finance. Although ABC was originally established as a rural lender, this focus diminished over time. According to employees, the bank previously viewed its large rural branch network as a weakness and lacked incentives to engage deeply in agricultural finance. However, under government policy and national strategy, ABC’s current leadership refocused efforts toward inclusive lending, instituting specific targets and resource allocation for rural revitalization. This renewed focus has driven main gains in loans, revenue, and profit, with inclusive finance loans increasing by over 30% year-on-year in 2023—the highest among China’s six largest state-owned lenders, including Bank of Communications (601328.SH) and Postal Savings Bank of China (601658.SH). ABC’s pace has pressured rivals, including ICBC [para. 7][para. 8][para. 9][para. 10][para. 11][para. 12][para. 13][para. 14][para. 15].

ABC’s recent success is widely attributed to its chairman, Gu Shu, who has a strong professional background in accounting and previously spent over two decades at ICBC. Gu has led ABC for almost five years, during which the bank’s market-oriented and policy-savvy approach has yielded swift, proactive business moves and revitalized internal operations and external image. Employees note the benefits of Gu’s forward-looking strategy and quick market responses, positioning ABC ahead of competitors [para. 22][para. 23][para. 24][para. 25].

By contrast, ICBC has registered steady but uninspired performance lately, with annual revenue declining for two consecutive years and into the first quarter of the current year. While ICBC benefits from its vast asset base, comprehensive licenses, and extensive domestic and international reach, this size makes new growth challenging. ABC, meanwhile, has expanded market share across multiple provinces and ranked first in new business among peers. In response, ICBC appointed Senior Vice President Yao Mingde as CFO and Chief Business Officer Tian Fenglin as board secretary, aiming to improve financial management and strengthen investor relations [para. 26][para. 27][para. 28][para. 29][para. 30][para. 31][para. 32][para. 33][para. 34].