In 2021, the pace of banking transformation and reform will continue to accelerate, and the foundation for long-term high-quality development of the industry will continue to be built. It is mainly reflected in the following aspects: increasing investment in financial science and technology and further accelerating digitization and lightening; Accelerate the transformation and development of green and inclusive business; Develop wealth management business and create a new business growth engine; Closely follow the regulatory orientation and improve the corporate governance ability and compliance level. The difference in the progress and effectiveness of reform and transformation has become a key factor affecting the long-term development and differentiation of banks.
Looking forward to the future, it is expected that the operation situation of Bank Of China Limited(601988) industry will return to a steady and stable situation in 2022, the situation of rare and high profit growth can not be sustained, the performance growth rate will return to normal, the growth rate of asset scale will remain stable, the asset structure will be further optimized around returning to the main credit industry and supporting the high-quality development of the real economy, although the asset quality may be disturbed by the downward pressure of the economy, However, the credit risk is generally controllable. With the steady and steady development of the industry as a whole, the business differentiation between banks is expected to further increase due to the increase of downward pressure on the economy and the difference in the progress and effectiveness of reform and transformation.
I. the pace of reform and transformation has been continuously accelerated to build a solid foundation for high-quality development of the industry
(I) increase investment in financial science and technology and further accelerate digitization and lightening
2021 is the year when the “three-year plan for financial science and technology” ends. After commercial banks collectively accelerate the pace of digital transformation in 2020, the banking industry continues to increase investment in financial science and technology in 2021, with remarkable achievements in financial science and technology construction. The strategic deployment arrangement of financial technology in the banking industry is more suitable for its own development needs. The technical practices such as data middle platform and privacy computing around data governance and trusted data flow have been highly valued in banking institutions. The innovative forms and practice scenes of financial science and technology system and mechanism within the bank are constantly enriched. The “industry university research” management mode integrating departments, R & D centers, subsidiaries and research institutes has become a new measure to deepen digital reform. Inclusive Finance and green finance have become the key practical application direction of financial science and technology. The pilot scale of financial infrastructure represented by digital RMB The application fields were expanded in an orderly manner. Digital transformation has become an important driving force for the “light” development of the banking industry.
In 2021, the banking industry will accelerate the improvement of fintech organizational structure, and fintech subsidiaries will become the new home of business. According to statistics, at present, there are 16 financial technology subsidiaries established in the banking field, involving five major state-owned banks, joint-stock banks, urban commercial banks and rural credit system, and the scope is further expanded. From the perspective of business positioning, the business positioning of the bank’s fintech subsidiaries can be basically divided into two directions: internal service, external output of technology and solutions. While serving the parent bank and exporting advanced technical experience to the industry, it can also provide technical services and build a socialized platform for small and medium-sized enterprises and grass-roots government departments to serve economic construction and social development.
(II) accelerate the transformation and development of green and Pratt & Whitney business
Since 2021, the regulatory authorities have focused their policies on Inclusive Finance and green finance, and their support has been increasing. Inclusive Finance enables small and micro enterprises, scientific and technological innovation enterprises and rural revitalization, and forms a diversified green financial product system, which has become the two major annual work directions of the banking industry. Inclusive Finance has gradually evolved from volume increase, price reduction and face-to-face expansion to improving service quality and efficiency. Green financial instruments such as green bonds, green insurance, green funds, green leasing and green trust continue to innovate, providing diversified financial services for enterprises. By the end of the third quarter of 2021, the balance of inclusive small and micro enterprise loans nationwide was 18.48 trillion yuan, with a year-on-year growth rate of 27.4%, and the balance of domestic and foreign currency green loans was 14.78 trillion yuan, with a year-on-year growth of 27.9%.
(III) accelerate the development of wealth management and create a new business growth engine
By the end of 2021, the transition period of new asset management regulations will come to an end. With the steady growth of residents’ wealth, the increasing demand for diversified allocation of funds, the acceleration of the net worth transformation of bank financial services, the continuous growth of the survival scale and increasingly rich types of financial products, and the financial subsidiary has become the core of commercial banks’ participation in asset management and wealth management transformation. According to the data released by the banking financial management registration and custody center on November 1, as of the end of the third quarter, the survival scale of bank financial products reached 27.95 trillion yuan, a year-on-year increase of 9.27%, of which the scale of net worth products increased steadily, accounting for 86.56%. In the third quarter, 305 institutions issued 11700 new financial products, raising 31.87 trillion yuan. At the end of the third quarter of 2021, the total number of bank financial management subsidiaries approved to be established in China increased to 29, and 21 officially opened. The product survival scale reached 13.69 trillion yuan, an increase of 36.75% over the middle of the year. The market share of financial management companies increased steadily, accounting for 48.97%, becoming the absolute main body of the financial management market. In 2021, the asset management scale of CCB, Agricultural Bank of China, Bank of communications, Everbright and China Merchants Bank financial management subsidiaries that opened earlier exceeded trillion. By the end of the third quarter of 2021, the balance of financial products managed by China Merchants Bank financial management was 2.79 trillion yuan, an increase of 13.88% over the end of the previous year. Among them, the balance of new products was 2.41 trillion yuan, accounting for 86.38% of the balance of financial products. Wealth management business has become a new growth engine for the transformation of the banking industry.
(IV) precise supervision, combining leniency with strictness, and more detailed policies
In order to effectively prevent risk events and alleviate the business pressure under the impact of the epidemic, the banking supervision overall adhered to the general tone of Combining Leniency with severity in 2021, and continuously deepening the reform of banking corporate governance is still one of the key directions of supervision. At the same time, the supervision has been strengthened, the policy coverage has been expanded and the content has been refined. Since 2021, the China Banking and Insurance Regulatory Commission has successively issued a number of policy documents, such as the measures for the performance evaluation of directors and supervisors of banking and insurance institutions (for Trial Implementation), the guidelines for corporate governance of banking and insurance institutions, the measures for the supervision of the behavior of major shareholders of banking and insurance institutions (for Trial Implementation), the measures for the supervision and rating of commercial banks, and improved the corporate governance mechanism of banking institutions, We will vigorously promote banking institutions to improve their corporate governance capacity and promote the high-quality and healthy development of the banking industry. In addition, the regulatory policy also organically combines social governance with corporate governance, covering liability quality management, real estate financial management, standardizing Internet loan business, green financial evaluation scheme, serving rural revitalization, promoting financial services for small and micro enterprises, financial product sales management measures, serving coal and power industry, supply chain financing reform Support high-level scientific and technological self-reliance and self-improvement and other fields.
II. Prospect of banking operation in 2022
(I) the overall operation situation is stable
Looking forward to the future, it is expected that the operation situation of Bank Of China Limited(601988) industry will return to a steady and stable situation in 2022, the situation of rare and high profit growth can not be sustained, the performance growth rate will return to normal, the growth rate of asset scale will remain stable, the asset structure will be further optimized around returning to the main credit industry and supporting the high-quality development of the real economy, although the asset quality may be disturbed by the downward pressure of the economy, However, the credit risk is generally controllable. In addition, the pace of reform and transformation has been deepened and accelerated, the value of digitization and lightness to the long-term development of banks has become prominent, the wealth management business has become a key track for bank business differentiation, and green finance and Inclusive Finance will usher in a broader development space.
From a macro perspective, the downward pressure on China’s economy increased in 2022, and the negative disturbance of the epidemic to the economy still exists. Under the triple pressure of demand contraction, supply impact and weakening expectation, the overall economic situation is facing downward pressure in the short term, but the fundamentals of China’s strong economic toughness and long-term improvement have not changed. At the same time, the countercyclical adjustment of policy has been strengthened. It is emphasized that the proactive fiscal policy should improve efficiency, pay more attention to accuracy and sustainability, and the prudent monetary policy should be flexible and appropriate, maintain reasonable and sufficient liquidity, and finally maintain the economic growth at a stable and reasonable level. Overall, the stable operation of the economy and the relatively friendly policy environment have laid the foundation for the steady operation of the banking industry in 2020.
In addition, the regulatory environment facing the banking industry will enter the stage of normalization and stability and maintain a moderate general tone. Among the important policies issued in 2021, the publication of the list of systemically important banks indicates that the supervision and guidance of banks to optimize their capital development model and improve their capital replenishment capacity will enter a long-term stage. The introduction of the Chinese version of TLAC regulatory rules has further improved the institutional framework for the supervision and risk disposal of China’s global systemically important banks, The ability to prevent and resolve systemic financial risks will be further enhanced. In addition, according to the completion of the regulation making plan of the central bank and the cbcirc, most of the policies that have not yet been implemented emphasize normative improvement rather than strengthening supervision.
(II) further increase the degree of differentiation in the industry
With the steady and steady development of the industry as a whole, the differentiation trend within the bank will increase significantly. Since 2021, the profitability of Bank Of China Limited(601988) industry has gradually recovered from the impact of the epidemic. However, due to the increased differentiation among banks, the recovery from imbalance has become a true portrayal of the industry. On the one hand, the gap between the growth level of operating revenue has been further widened. In 2021, under the background of the recovery of revenue, more listed banks experienced a decline in revenue. On the other hand, the net profit showed a historically rare high growth, mainly due to the good recovery of the profits of large state-owned banks and joint-stock banks, while small and medium-sized banks have not yet recovered from the impact of the epidemic. The overall improvement of profitability indicators is mainly driven by the improvement of the profitability of large state-owned banks and joint-stock banks. The profitability indicators of urban commercial banks and rural commercial banks do not rise but fall. In 2022, due to the increasing downward pressure on the economy and the difference in the progress and effectiveness of reform and transformation, the business differentiation among banks is expected to be further widened.
With the adjustment of China’s economic structure, banking reform and transformation is imminent. The development on the track of financial technology, wealth management, green and Inclusive Finance will become the key to the long-term business transformation of banks. First, the speed of bank light transformation driven by financial technology has been further accelerated. Light banks with low capital consumption, high quality and high efficiency are an important direction of banking reform. As an important tool to reshape banking business form and service mode, financial technology will promote banks to comprehensively improve their operating capacity and realize rapid and intelligent comprehensive light transformation. Second, green finance and Inclusive Finance will usher in broader development space. Under the guidance of the dual carbon goal and the fundamental task of common prosperity, financial support for the real economy will be further strengthened, new areas of innovative green financial instruments, products and green financial services will continue to emerge, the scope of Inclusive Finance will be further expanded, and digital Inclusive Finance will usher in a new breakthrough. Third, as the main track of banking transformation, wealth management ushers in a key stage of improving quality and efficiency. Flexible and open customer acquisition strategy, professional service ability and diversified product structure are still the core influencing factors of wealth management business. With the financial subsidiaries established by different types of banks participating in the market competition, the trend of differentiated competition and business differentiation will be more significant.
(Xinhua Finance)
