The banking drama of 2023 has kicked off, and the data stories on the stage have attracted much attention. On this stage, data released by the State Administration of Financial Supervision and Administration on February 21 revealed a striking trend: against the backdrop of a general decline in net interest margins of commercial banks, private banks bucked the trend**. This is a phenomenon worth pondering, but what is driving this retrograde?
It is self-evident that the net interest margin of commercial banks has continued to decline from the first quarter to the fourth quarter of 2023. The net interest margins of large commercial banks, joint-stock commercial banks, and city commercial banks all showed a downward trend, while private banks showed an upward trend. According to the data, in the fourth quarter of 2023, the net interest margin of private banks was 439%, 028 percentage points.
The reason for this, experts give different explanations. Zeng Gang, director of the Shanghai Finance and Development Lab, believes that due to their small scale, private banks have adopted an online and digital development model, avoiding fierce competition with other banks, so they have gained a sinking customer base, thereby increasing their net interest margins. Dong Ximiao, chief researcher of Zhaolian and part-time researcher of the Institute of Financial Research of Fudan University, pointed out that the customers of private banks are relatively sinking, and the customer qualifications are average, so the interest margin is relatively high, but the overall scale of private banks is small and greatly affected by the head private banks.
However, we also have to consider whether the upward trend in net interest margins of private banks can be sustained. Zeng Gang believes that this depends on the operation of the net interest margin of the overall banking industry and the degree of market competition. Although private banks have avoided fierce competition through digital and e-commerce scenario-based operation models, their net interest margins may converge with the overall banking industry as market competition intensifies. Lou Feipeng also said that in the context of the continuous decline in the net interest margin of the banking industry, the probability of the net interest margin of private banks continuing to rise is low.
To sum up, although the phenomenon of net interest margin of private banks bucking the trend** is eye-catching, the logic behind it is not complicated. With the changes in the market, private banks may face more challenges, and how to deal with these challenges requires more in-depth thinking. In your opinion, in the current financial market context, how should private banks adjust their strategies to meet the challenges ahead?