Text: Xiangshan Finance.
Recently, there is a TV series "Flowers" that is particularly popular, and there are also many elements of the financial industry in this ** story. In addition to the story, there is also the shadow of the city commercial bank behind this film, and over the years, the city commercial bank has also been actively exploring new business growth.
The banking sector has always been an industry with a high proportion of A** market weight, and its importance is self-evident.
In this industry, there are four types of players: large state-owned banks, joint-stock banks, urban commercial banks and rural commercial banks. In the last decade, the fastest growing and most dynamic are the city commercial banks.
In the 2023 "Gyro" evaluation list released by the banking industry, the top ten city commercial banks are Bank of Jiangsu, Bank of Beijing, Bank of Ningbo, Bank of Shanghai, Bank of Nanjing, Bank of Chengdu, Bank of Hangzhou, Huishang Bank, Bank of Changsha, and Bank of Suzhou.
Although the volume is not as large as the four major banks and large joint-stock banks, after rapid development, the volume of the head city commercial banks is actually not small.
At present, in the banking industry, there are more than 10 urban commercial banks with more than 10 trillion yuan and 13 urban commercial banks with more than 500 billion yuan. Among the "trillion club" are Bank of Jiangsu, Bank of Shanghai, Bank of Ningbo, Bank of Nanjing, Bank of Hangzhou, etc.
According to the third quarter report of last year, among these trillion-dollar city commercial banks, only Bank of Beijing, Bank of Shanghai, and Bank of Nanjing achieved single-digit growth, and the remaining five city commercial banks all achieved double-digit growth.
After 2023 and 2024, it is worth a look at how city commercial banks should find new increments next.
City Commercial Banks in 2023: Finding a Breakthrough in Differentiation
On the whole, the development of urban commercial banks is differentiated, and the gap between the top urban commercial banks and the middle and tail urban commercial banks is further widened.
The position of Bank of Beijing, which ranks first in terms of assets, has not been shaken, but the performance of Bank of Jiangsu in terms of revenue and profit has been surpassed.
From the performance point of view, the revenue of Bank of Jiangsu was 5867.8 billion, net profit attributable to the parent company of 25654, while Bank of Beijing's revenue was 4973.9 billion, net profit attributable to the parent company of 2023.3 billion, slightly behind.
Judging from the profit performance of the parent company in the first three quarters, Bank of Jiangsu, Bank of Beijing and Bank of Ningbo ranked among the top three. Bank of Shanghai, Bank of Nanjing, and Bank of Hangzhou followed respectively.
There are many criteria for judging a bank's operations, but the core is asset quality and profitability.
From these two points of view, the asset quality and profitability of the leading city commercial banks far exceed that of the industry as a whole.
From the perspective of provision coverage ratio, Bank of Beijing is the leading bank with a relatively low provision coverage ratio of 21523%, but still more than the industry average (182.)49%）。
In addition, in addition to the excellent performance of the leading city commercial banks, the city commercial banks as a whole showed a high non-performing loan ratio (196%)), low provision coverage ratio, and weak profitability (ROA and net interest margin are as low as 0., respectively64% and 173%）。
This differentiation is not only reflected in the operation, but also in the regional distribution.
The leading city commercial banks are often located in economically developed areas, such as Beijing, Shanghai, Jiangsu, Zhejiang and other places. This may be because the development of urban commercial banks is inseparable from the development of regional economic industries.
For example, from 2013 to 2016, Jinshang Bank's revenue increased to 3.9 billion, but its net profit fell to 1 billion. During the same period, Bank of Nanjing's revenue increased from 10.5 billion yuan to 26.2 billion yuan, and its net profit increased from 4.5 billion yuan to 8.3 billion yuan.
In addition to operational factors, the reason for this difference may also be that 2013-2015 was a period of decline for the coal industry
However, in recent years, the trend of industry development has also changed. Outside of the industry, banks with better contributions to retail business have seen good growth.
Take the Bank of Ningbo, for example. Bank of Ningbo's revenue and profit performance in the first three quarters of 2023 are good, with revenue growth of 545%, the net profit attributable to the parent increased by more than 12%, and the non-performing rate was only 076 per cent, and the provision coverage ratio is as high as 48057%。
Behind this performance, it is inseparable from the contribution of the retail business.
On the one hand, in the past few years, the structural adjustment of the retail business of Bank of Ningbo has been completed, and most of the retail business is consumer loans, and personal mortgage loans do not account for a high proportion. On the other hand, Bank of Ningbo's retail business has a low NPL rate.
The low-risk, high-growth retail business is an important driving force for the growth of city commercial banks.
From the perspective of the industry environment, the business environment of city commercial banks is also changing. The net interest margin has narrowed due to the demand for lower interest rates on corporate credit, and city commercial banks also need to find new growth breakthroughs.
Therefore, the retail business with a higher net interest margin and strong anti-cyclical ability is a good direction.
For city commercial banks, the higher the proportion of retail business, the more stable the net interest income and the higher the asset quality.
However, there are also challenges for city commercial banks to transform their retail business.
First, most of the retail business is actually done by the big four banks. A large part of the retail business is actually personal loans, which are mainly housing loans, and the four major banks are the main undertakers of this part of the business.
Data shows that from 2007 to 2022, the proportion of personal housing loans of the four major banks has increased from about 15% to 30%. The retail business is also an important profit for the Big Four**.
Next, the increment decreases, and it is not easy for the city commercial banks to get a piece of the cake.
Second, whether the retail business can be done well or not is a test of risk management capabilities.
In terms of retail business, Shanghai's banking industry has been looking for new opportunities in recent years.
In 2018, the personal consumption loan market exploded, and in the same year, the balance of retail loans of Bank of Shanghai reached 2,7682.1 billion yuan, of which consumer loans amounted to 15747.6 billion yuan, and the balance of Internet consumer loans was 10951.9 billion yuan, a year-on-year increase of 26755%。
Since then, the non-performing rate of consumer loans of Bank of Shanghai has reached 187%。
In the first half of 2023, the non-performing consumer loans of Bank of Shanghai are still as high as 181%。By the end of the third quarter of 2023, Bank of Shanghai had a credit impairment loss of 1002 billion yuan, a year-on-year decrease of 30%.
It can be seen that the premise of "seeking breakthroughs" in the retail business is to be able to "control risks".
In addition to consumer loans, Bank of Shanghai is also looking for new breakthroughs. In the first half of 2023, the number of inclusive loan customers of Bank of Shanghai increased by 33 compared to the end of 202291%, and the balance of inclusive financial loans increased by 15 from the end of 202294%.Next. Whether the inclusive business can become a new growth breakthrough point may be one of the keys to the future growth of Bank of Shanghai.
Looking ahead to 2024: new opportunities in industry and consumption
If the city commercial banks in 2023 are constantly seeking new breakthroughs and new value growth, then the city commercial banks in 2024 need to further take root in the industry.
What are the core competencies of banks? It is the competitiveness of the industry and the competitiveness of consumption.
City Commercial BanksGrowth is often inseparable from the growth of the local economy.
The deep logic of the transformation of consumption of Bank of Shanghai lies in the fact that the regional economy is developed and the society has strong consumption capacity, and the Bank of Jiangsu is focusing on small and micro enterprises and finding growth points from inclusive finance is also because of the strong vitality of small and medium-sized enterprises in Jiangsu.
For Bank of Zhengzhou, which was born in the Central Plains, the new growth point stems from taking root in industrial construction.
In the first half of 2023, Bank of Zhengzhou's total assets increased by 428%, and the total amount of loans increased by 611%。During the same period, the non-performing loan ratio of Bank of Zhengzhou decreased compared with the end of the year, and the balance of non-performing loans decreased by 537%。
Behind the increase and decline, the ability to resist risks has been enhanced, and the growth of the total amount also shows that the efforts to support the development of the industry have not decreased.
Bank of Zhengzhou has always been characterized by stability, which stems from the endogenous mission of financial empowerment of the regional industrial economy, and also from the management style of steady operation. Tianyancha AAPP information shows that the distribution of Bank of Zhengzhou's foreign investment is mainly concentrated in Henan.
In the process of industrial economic recovery, this stability may play a more important value.
In addition to stability, the growth opportunity of urban commercial banks still lies in the consumption side.
One judgment is that the pressure on the industry's net interest margin is likely to continue.
Overall, the net interest margin of retail business will still be stronger than that of corporate business in 2024, and retail business will still be an important direction for banks to grow.
Objectively, stimulating consumer demand is still the first priority to promote economic recovery and growth.
Therefore, the first opportunity for City Commercial Banks in 2024 is still the retail business.
The popularity of ice and snow tourism in Harbin also shows that there is still a large amount of untapped consumer demand in the market. How city commercial banks find new growth on the retail side may be a new opportunity.
The market is not without consumer demand, but to release more consumer demand.
For example, the automotive industry is experiencing a new historical opportunity to replace fuel vehicles with new energy, can we further expand this part of the business and tap new growth?
Further, the key to mining growth is to further improve the risk control ability and tap the incremental space of the retail business as much as possible on the premise of effectively controlling the defective rate.
To tap the personal retail business, on the one hand, is to tap the growth potential of high-quality consumer loans. On the other hand, it is also necessary to improve the ability of personal financial management business.
In addition to consumption, improving the ability and level of financial management is the key to unleashing new growth momentum.
A definite industry trend in 2024 is that more residents will shift from wealth management to deposits, banks will shrink their financial management operations, and risk awareness will lead to residents becoming more saver than ever.
However, the equity market will not always be bearish, and once the equity market warms up, there will be new opportunities for growth.
Although banks with advantages in financial management in the past (such as China Merchants Bank) will still be very competitive, if city commercial banks can grasp this opportunity, they may also get a good increase.
Conclusion:
2023 is a year of adjustment for the banking industry, and it is also a year for finding breakthroughs. Today's 2024 is a year of solid operation and in-depth implementation of the real industry.
Past development shows that for city commercial banks, the real core competitiveness is neither the scale of assets nor the scale of profits, but the real industry + consumption.
Next, how to achieve tangible results in these two directions is the key to the value growth of city commercial banks.
Disclaimer: This article is based on the company's statutory disclosures and public information, but the author does not guarantee the completeness and timeliness of the information. Another: **There are risks, and you need to be cautious when entering the market. The article does not constitute investment advice, and whether to invest or not should be determined by yourself.