Strong compliance chassis before running!
Author: Mondo.
Edit: Wen Dao.
Wind: Rocks.
*: Rhodium Finance - Rhodium Finance Research Institute.
Finance is no small matter! Supervision of "thorny teeth" and strong compliance operation of institutions is never empty talk.
On February 18, the State Administration of Financial Supervision and Administration issued the first batch of bank fines for the Year of the Dragon. Shanghai Pudong Development Bank, Industrial Bank, Huaxia Bank, and Yingda International Trust were fined a total of 9.21 million yuan, and a number of responsible personnel were punished to varying degrees.
Among them, Huaxia Bank Beijing Branch was fined the most, reaching 4.61 million yuan, including inadequate management of personal operating loans and misappropriation of funds; Deposit and loan linkage of personal agricultural guarantee loans; The post-loan management of working capital loans is not in place, and the funds are misappropriated; The management of real estate development loans seriously violated the rules of prudent operation; the use of improper means to grant loans; Insurance sales can be retrospectively managed, and the management is not standardized; Insurance** does not have a separate commission account.
Pudong Bank Beijing Branch had major deficiencies in risk management and control due to cash clearing outsourcing; negligence in supervising and inspecting outsourcing activities of cash clearing; Serious imprudent cash management activities and a fine of $1.5 million.
It is true that there is a lag in the fines, which does not represent the current situation. It can be seen from a long line of sight that in recent years, there is no lack of troubles in the two lines stepping on the "red line", and there is a second "rollover" phenomenon in the penalty cause.
For example, in June 2020, Huaxia Bank Beijing Branch was fined 500,000 yuan for serious violations of prudential business rules. Due to imprudent loan management, Huaxia Bank Hangzhou Branch was fined 600,000 yuan. In December 2021, Huaxia Bank was notified by the China Banking and Insurance Regulatory Commission (CBIRC) for tying in personal accident insurance to personal loan customers. In December 2023, due to inadequate post-loan management and misappropriation of credit funds, Huaxia Bank Changji Hui Autonomous Prefecture Branch was fined another 300,000 yuan.
Looking at Shanghai Pudong Development Bank again, in February 2018, the Leshan Branch of Shanghai Pudong Development Bank was fined 400,000 yuan for inflating deposits; In May of that year, the Zhengzhou branch of Shanghai Pudong Development Bank was fined 500,000 yuan for the same reason. In April 2023, the Suqian branch of Shanghai Pudong Development Bank was fined 1.2 million yuan for inflating deposits.
According to incomplete statistics, in 2023 alone, Huaxia Bank, Shanghai Pudong Development Bank and their branches will receive many fines, and the total amount of fines and confiscations will reach more than 10 million yuan.
It is said that knowing mistakes can improve a lot, but the problem is **? It is said that saying goodbye to the old and welcoming the new, among the "No. 1 fines" in the Year of the Dragon, what should be the reflection and how to strengthen the risk control fence?
Fines, complaints about stubborn diseases
Tighten the quality control fence
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It's not too demanding. Huaxia Bank was listed on the A-share market in September 2003 and is the fifth listed bank in China. As of the end of 2023, the total assets are 42,5476.6 billion yuan, an increase of 9 percent over the end of the previous year09%。In the British Banker's ranking of the world's 1,000 banks released in July 2023, the bank ranked 46th in the world.
It can be said that as a representative of domestic joint-stock banks, Huaxia Bank has a profound foundation and good comprehensive strength. However, such a leading bank company has no shortage of troubles about violation fines. According to the Enterprise Early Warning Communication, since June 2016, the bank has disclosed 11 financial regulatory penalties, 9 administrative penalties, and 3 administrative regulatory measures, with a cumulative amount of fines and confiscations of 1$2.6 billion.
In March 2022, Huaxia Bank was fined 4.6 million yuan for violations of laws and regulations in the data quality and data reporting of the regulatory standardized data (east) system. In May 2021, Huaxia Bank was fined 98.3 million yuan for 27 violations of laws and regulations, including non-compliance in the information disclosure of some wealth management products and the use of wealth management funds to connect with the bank's credit assets.
In addition, there are also many fines for enterprises investing abroad. From October 2017 to January 2024, enterprises, including Beijing Daxing Huaxia Village Bank Liability *** Huaxia Financial Leasing***, received a total of 11 fines, with a total of 570 fines confiscated270,000 yuan.
At the same time, the total number of judicial cases involved in the bank reached 326. Among them, the most 137 financial loan contract disputes and loan contract disputes were recorded.
According to the "Circular of the Consumer Rights Protection Bureau of the China Banking and Insurance Regulatory Commission on Consumer Complaints in the Banking Industry in the Fourth Quarter of 2022", Huaxia Bank has 1,348 complaints related to credit card business, accounting for 776%。
In the first half of 2023, the Shenzhen Supervision Bureau of the State Administration of Financial Supervision issued the "Notice on Consumer Complaints in Shenzhen's Banking Industry in the First Half of 2023", which showed that Huaxia Bank Shenzhen Branch had 70 complaints, accounting for 12% of the total number of complaints from joint-stock commercial banks under its jurisdiction09%, ranking second.
Fines and complaints are issued to torture the company's internal control, compliance awe awareness, and senior management governance ability.
On February 23, 2024, Huaxia Bank announced that the board of directors agreed to appoint Han Jianhong and Tang Yiming as vice presidents. This is the third time since the beginning of the year that the bank has issued an announcement on senior management changes: on February 20, Wang Minglan, chairman of the board of supervisors, retired and resigned; On January 12, Guan Wenjie resigned as executive director and president.
It is worth noting that Kwan Wenjie's qualifications for the presidency were approved in April 2023, that is, the term of office of the presidency is less than one year. Prior to that, the position had been vacant for almost nine months from February 2022.
In the view of industry analyst Guo Xing, in recent years, the banking industry as a whole has faced the challenge of narrowing interest rate spreads, and the front-line operating pressure has increased. In order to improve profitability, they have accelerated retail transformation and business innovation and upgrading. These changes can help enterprises open up new growth space and improve performance, but they should also be wary of taking too big steps and acting out of shape, which brings the risk of derivative violations. How to develop both quality and efficiency, and strengthen the quality control fence while enriching the business, is a new topic for practitioner governance.
Increasing profits does not increase income
All aspects of business pressure
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It's not too much of an exaggeration. Looking at the performance in depth, Huaxia Bank's operating pressure is visible to the naked eye.
On February 22, 2024, the 2023 performance express report was announced: revenue of 9320.7 billion yuan, down 064%；Net profit attributable to the parent company was 2636.3 billion yuan, a year-on-year increase of 530%。
It is not easy to maintain profitable growth, but it is rare to increase profits without increasing income, and there is a question mark over sustainability and development stability.
From an extended perspective, in 2019, Huaxia Bank's revenue increased by 17% year-on-year32%, the highest growth rate in recent years. From 2020 to 2022, the rate continued to decline, with a year-on-year increase. 59%、-2.15%, an improvement in 2023, but still negative.
The growth rate of net profit is also under pressure, from 2021 to 2023. 3%。
In the first three quarters of 2023, revenue was 7110.9 billion yuan, down 254%, net profit attributable to the parent company was 1795.5 billion yuan, a year-on-year increase of 515%。In addition to increasing profits but not increasing revenue, the profit volume ranks second to last among the 9 A-share stock banks.
In terms of business, the net interest income in the first three quarters of 2023 was 5123.1 billion yuan, down 9 percent year-on-year16%。Among them, interest income increased by 011. Interest expense increased by 913%。
As of the end of the third quarter of 2023, the net interest margin was only 191%, down 018 percentage points; Net interest margin margin 187%, down 025 percentage points. With the 5-year LPR falling again, it is worth examining how the trend will be in 2024.
In addition to the growth worries, you also need to pay attention to business risks. As of the end of September 2023, the non-performing loan ratio was 172%, the highest value among the 9 A-share banks, and higher than the average level of China's commercial banks in the same period (non-performing loan ratio of 1.).61%）。
The good news is that the non-performing loan ratio has dropped to 1 by the end of 202367%, but compared with 1There is still a gap between the average of 59 per cent.
As of the end of June 2023, the non-performing loan ratio of manufacturing, wholesale and retail industries was at a high level, while the non-performing loan ratio of real estate, electricity, heat, gas and water production and ** industry, leasing and business services industries increased.
On the other hand, there is greater pressure to replenish capital. As of the end of September 2023, Huaxia Bank's core Tier 1 capital adequacy ratio was 887%, down 0. from the end of 202237 percentage points, Tier 1 capital adequacy ratio of 1018%, down 118 percentage points, capital adequacy ratio 1196%, down 131 percentage points.
In the same period, the capital adequacy ratio of China's commercial banks (excluding branches of foreign banks) was 1477%, an increase of 011 percentage points. The Tier 1 capital adequacy ratio was 119%, up 0. from the end of the previous quarter12 percentage points. The core Tier 1 capital adequacy ratio was 1036%, up 0. from the end of the previous quarter08 percentage points.
On January 1, 2024, Huaxia Bank announced that on January 8, 2019, it issued 256.5 billion shares will be listed and circulated on January 8, 2024. It is reported that the above-mentioned restricted shares account for 1667%。
On the whole, from the resignation of the president, the million-dollar fine to the significant lifting of the ban, and the pressure of declining revenue, Huaxia Bank has been moving forward with great events since the beginning of 2024. How to effectively resolve internal and external hidden dangers, wait and see.
The "King of the Princess" is troubled
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Shanghai Pudong Development Bank is also under pressure.
As the "first stock of Shanghai Bank", Shanghai Pudong Development Bank, located in the Yangtze River Delta, can be said to have the best time and place. In the past, it was known as the "king of corporate business" by virtue of its strong corporate business, and its performance was once comparable to that of China Merchants Bank and Industrial Bank. However, with the strategic adjustment and expansion of retail business, performance growth has gradually slowed down, and there is no shortage of transformation pains.
According to Alpha Factory, from 2015 to 2017, SPD Bank's credit card receivables increased nearly 3 times, and consumer loans increased nearly 3 times from 2016 to 2018.
However, the revenue in the same period could not hide the sluggish growth. From 2015 to 2018, it was 14655 billion, 16077.9 billion, 16861.9 billion, 17086.5 billion, corresponding to the growth rate. 33%, continuing to slow down. The growth rate of net profit in the same period was also in single digits, respectively. 05%。
From 2020 to 2022, the non-performing loan ratio of corporate consumer loans was as follows. 72%。The credit impairment loss was 7954.7 billion yuan, 7833.1 billion yuan, 7595.2 billion yuan, although there is a downward trend, the overall is still at a historical high.
Sun Yewen, an industry analyst, believes that SPD Bank's transformation from corporate business to retail is in line with market changes and is the right choice. However, due to the nature of the business, to replicate the success of China Merchants Bank, it is a great test of the enterprise's refinement, professionalism, quality control and risk control capabilities.
According to the former China Banking and Insurance Regulatory Commission, the total number of consumer complaints against SPD Bank in 2022 will reach 18,805, a year-on-year increase of 1388%, the highest number of complaints among joint-stock banks for two consecutive years. Among them, the credit card business, which focuses on development, is the hardest hit area, accounting for 8248%。
According to the Circular on Consumer Complaints in the Banking Industry, SPD Bank received 3,616 complaints in the first quarter of 2023 alone, ranking second among national joint-stock commercial banks. According to the data of the third quarter of 2023, SPD Bank still ranks among the top three joint-stock banks in terms of consumer complaints.
As of 18:00 on February 29, 2024, the cumulative number of complaints related to Shanghai Pudong Development Bank is 37,530, and 218 in the past 30 days. Among them, the credit card business, which is regarded as a new growth point, is a focus, including questions such as arbitrary interest collection, high-pressure collection, and unreasonable deductions.
Judging from the actual fines, the 77.5 billion yuan fraud case of the Chengdu branch of the Shanghai Pudong Development Bank broke out in 2018, causing a shock in the industry. Although the bank said that it would learn from the pain and strengthen the construction of internal control and risk control. Judging from the follow-up fines, it is not easy to fill the compliance shortcomings, and the construction of internal control still has a long way to go.
According to data from Flush iFinD, regulators issued nearly 3,000 fines to the banking industry in 2022, with a confiscated amount of more than 1.9 billion yuan. Among them, Shanghai Pudong Development Bank ranked first among joint-stock banks with 64 fines and fines of more than 60 million yuan.
According to incomplete statistics from Bedo Finance, since 2023, SPD Bank and its branches have been "named" by the regulatory authorities 15 times, and 3 fines exceed one million. In the past three years, a number of corporate executives have been investigated, among which the private banking department is the "hardest hit area" for suspected serious violations of duty.
At the beginning of 2024, the Urumqi branch of Shanghai Pudong Development Bank was fined 1.25 million yuan for the illegal inflow of wealth management funds into restricted areas, the illegal transfer of costs, and the cost of collateral property insurance borne by customers. Only a month later, the Beijing branch of Shanghai Pudong Development Bank was fined 1.5 million yuan for "three crimes", and another 10 relevant responsible persons were punished.
It can be seen that, similar to Huaxia Bank, the quality control fence of SPD Bank needs to be strengthened urgently.
Profits continued to decline
The new commander reinvigorates his ambitions
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Looking at the performance, there may also be helplessness and urgency.
In the first half of 2023, SPD Bank's revenue will be 912300 million yuan, a year-on-year decrease of 752%；Net profit attributable to shareholders of the parent company was 2313.8 billion yuan, a year-on-year decrease of 2332%。Among the 42 A-share listed banks, net profit fell the most.
In the first three quarters of 2023, the revenue will be 13281.5 billion yuan, down 756%；Net profit attributable to the parent company was 2798.6 billion yuan, a year-on-year decrease of 3083%。Among them, the revenue in the third quarter was 4158.6 billion yuan, down 766%；Net profit 484.8 billion yuan, a year-on-year decrease of 5210%。Compared with the interim report, the decline has expanded.
Stretching the dimension, the revenue from 2020 to 2022 is 19638.4 billion yuan, 19098.2 billion and 18862.2 billion yuan, an increase of 2 in 2020 alone99%；Net profit 5832.5 billion yuan, 5300.3 billion and 5117.1 billion yuan, with a growth rate of -099%、-9.12% and -346%。
According to Alpha Factory, peer data in 2022 shows that among the nine A-share listed national joint-stock banks, SPD Bank ranks second to last in weighted average return on equity (ROE) and average return on total assets (ROA), respectively. ROE and ROA have declined for six consecutive years, with the former falling from 16 in 201635% to 7. in 202298%, the latter from 098% down to 062%。
Regarding the declining performance, at the 2023 third quarter performance briefing, Xie Wei, secretary of the board of directors of Shanghai Pudong Development Bank, said that there are two reasons. First, due to the low interest rate in the loan market and the repricing of existing assets, net interest income decreased year-on-year; At the same time, due to the fluctuation of the capital market, the income contribution of intermediate businesses such as wealth management, wealth management and credit cards decreased. As of the end of September 2023, net interest income was 9054.5 billion, down 1087%；Exchange gains and losses - 382.4 billion, down 15463%。
On the other hand, in recent years, the company has taken the initiative to adjust its asset structure, continue to promote the non-performing pressure drop, and increase the provision for risks, which has affected its operating efficiency to a certain extent. As of the end of September 2023, the impairment loss of book assets was 49 million, a year-on-year increase of 1395%, credit impairment loss 6111.9 billion, a year-on-year increase of 569%。
It's not an exaggeration. Flush iFindo data shows that the net interest margin of Shanghai Pudong Development Bank in 2018 was 194%, ranking fourth among the 9 A-share stock banks. As of the end of the third quarter of 2023, the net interest margin was only 143%, down 0. from the same period in 202227 percentage points, and the ranking also slipped to the bottom.
In terms of risk compensation capabilities, it is also similar to Huaxia Bank and needs to be improved. The core Tier 1 capital adequacy ratio was 910%；The Tier 1 capital adequacy ratio was 1080%；The capital adequacy ratio was 1294%。Although it is higher than the regulatory red line, it is lower than the average of commercial banks in the same period (capital adequacy ratio of 14.).77% and 119% and 10 core Tier 1 capital adequacy ratio36%）。
Or affected by the sluggish performance, shortly after the 2023 interim report, the former chairman Zheng Yang and president Pan Weidong both resigned. Zhang Weizhong took over as chairman.
According to public information, Zhang Weizhong was born in 1967 and has worked in CCB for 28 years, has considerable experience in the field of corporate business, has made great achievements in the field of inclusive finance, and has repeatedly expressed his views on the development of inclusive finance in public. Or based on this, there is no shortage of expectations for the revival of SPD Bank.
It's just that, judging from the above troubles, the burden on the shoulders of this new handsome man who has been in office for less than half a year is still not light.
No anger, no offense
Is there a butterfly change in 2024?
laocai
financial activity, economic activity; The economy is prosperous, and the finance is prosperous.
When the clarion call to accelerate the construction of a financial power sounds, the bank that is the mother of all industries must be the vanguard and the main force, and the first-line enterprises are especially responsible.
There are always two sides to the coin, aside from the above-mentioned slots and pain points, Huaxia Bank and Shanghai Pudong Development Bank also have many real moves to explore the development of retail business and co-prosperity and symbiosis with the real economy.
For example, relying on the self-developed "Inclusive Finance Intelligent Risk Control Management Platform", Huaxia Bank has tailored an exclusive digital product "Vegetable Basket Guaranteed Supply and Loan" for the Beijing Xinfadi market. As of August 2023, the cumulative amount of loans has exceeded 300 million yuan, serving nearly 150 customers. It also launched the "Specialized, Specialized, Special and New Thousand and Ten Project", and in the first half of 2023, the "specialized, special and new" small and micro customers will grow rapidly.
Looking at Shanghai Pudong Development Bank, it has launched a series of "Puke" products for science and technology enterprises, providing "5+7+X" combination services, and the products have four characteristics: full-cycle, multi-integration, digital intelligence, and customization, which can not only meet the financial needs of various technology enterprises throughout the life cycle, but also support the whole process of innovation.
In addition, we will give full play to the home advantage of the Yangtze River Delta and innovatively launch a series of special financial services such as "long-term three loans", "long-term three debts" and "long-term three purchases". As of the end of June 2023, SPD Bank has served a total of 42 corporate customers in the Yangtze River Delta80,000 households, with more than 57 million retail customers; The asset scale in the Yangtze River Delta region is 255 trillion yuan, with a loan balance of 162 trillion yuan, with a deposit balance of 218 trillion yuan, the balance of deposits and loans ranked first among joint-stock peers.
In response to internal control issues, taking the first half of 2023 as an example, Huaxia Bank continued to optimize the credit management mechanism and strengthen the supervision of credit extension to improve the efficiency of blocking and resolving high-risk businesses. At the same time, we have accelerated the digital and intelligent transformation of risk control, iteratively upgraded the enterprise big data risk identification and early warning system, and improved the early warning ability.
Looking at Shanghai Pudong Development Bank, we will continue to promote the reduction of non-performing pressure, strictly control risk costs, and control the quality of delivery. As of the end of September 2023, the balance of the latter three types of non-performing loans was 7460.8 billion yuan, a decrease of 0$1.1 billion; Non-performing loan ratio 152%, unchanged from the end of the previous year; The provision coverage ratio was 17704% up 1800 percentage points; Loan provision ratio 268% up 026 percentage points.
It can be seen that Huaxia Bank and Shanghai Pudong Development Bank are also making a big move, with a sense of compliance, professionalism and innovation. From this point of view alone, the outside world should give both more time and patience.
There are clouds in the Analects of Yongye: No anger, no fault. Fines have a lag, and performance only represents the past. I hope that the "No. 1 Fine" in the Year of the Dragon can bring more spurs and incentives to Huaxia Bank and Shanghai Pudong Development Bank, turn pressure into motivation, and show more transformation and rebirth in 2024.
Shame and courage, live up to the era of a strong country.