Comprehensively entering the wealth management market has become the “coincident” transformation path of major banks, and private banks occupy a more and more important position in the wealth management territory of banks.
According to the financial reports of 2021 recently released by listed banks, by the end of last year, the Aum and the number of customers of many banks had increased by more than 10% compared with the end of 2020.
In addition, with the growth of high net worth customer wealth and all-round service demand of enterprise inheritance, private banking services are expanding from early asset allocation to family governance, family style inheritance and other fields.
China Everbright Bank Company Limited Co.Ltd(601818) financial market department macro researcher Zhou Maohua told Huaxia times that Bank Of China Limited(601988) traditional business operation pressure is rising, market competition is intensifying, China’s consumption upgrading and other factors have forced the banking business to accelerate the transformation and development. Private banks themselves are asset light and highly profitable businesses, and belong to the retail business line, which helps to promote the transformation of banks to retail business and expand business profit space.
8 AuMS with double-digit growth, investment attraction and ping an increased by more than 20%
Regulators first proposed the concept of private banking in 2005. Now China’s private banking has gone through more than ten years.
In recent years, when facing the problems of shrinking net interest margin, non-performing assets or continuous exposure, the heavy capital development model driven by the scale of the banking industry is under pressure, and the private banking business is expected to become a new engine for the bank’s own profit growth and business model transformation.
At the performance conference, Bank Of China Limited(601988) executive director and vice president Lin Jingzhen said: “in 2021, the development of wealth finance of our bank will further open a new situation. In particular, the number of medium and high-end customers has increased to the highest level in recent three years, and the brand advantage of wealth management has gradually emerged.”
In response to this, the China Times reporter sorted out the private banking data from the annual reports of 11 listed banks, including the private banking data from the annual reports of 11 listed banks, including the private banking data from the annual reports of 11 listed banks, including Bank Of China Limited(601988) , China Everbright Bank Company Limited Co.Ltd(601818) , Industrial Bank Co.Ltd(601166) , China Minsheng Banking Corp.Ltd(600016) , etc. According to the data, this is also one of the most powerful commercial banks in China.
By the end of 2021, the number of private banking customers of 11 banks had achieved double-digit growth, of which the asset management scale of 9 banks maintained double-digit growth. Among them, Industrial And Commercial Bank Of China Limited(601398) private bank has the largest number of customers, reaching 195500 China Merchants Bank Co.Ltd(600036) private banks have the largest assets under management, amounting to 3.39 trillion yuan.
Specifically, China Merchants Bank is the only bank among the 11 banks to break through the 3 trillion yuan mark, with a year-on-year increase of 22.32%, and the growth rate is also the second among the 11 banks.
Meanwhile, AUM of Industrial And Commercial Bank Of China Limited(601398) , Bank Of China Limited(601988) , China Construction Bank Corporation(601939) private banks exceeded 2 trillion yuan, which were 2.32 trillion yuan, 2.16 trillion yuan and 2.02 trillion yuan respectively. These three state-owned banks and China Merchants Bank Co.Ltd(600036) rank in the first echelon.
Agricultural Bank Of China Limited(601288) , Ping An Bank Co.Ltd(000001) is the second echelon of AUM above 1 trillion Agricultural Bank Of China Limited(601288) AUM1. 85 trillion yuan, with a steady increase of 8.87% year-on-year.
Ping An Bank Co.Ltd(000001) has grown rapidly in recent years, becoming a “dark horse” in the field of private banking. In 2019, the management scale of Ping An private bank increased by more than 60% year-on-year and 55% in 2020. In 2021, the bank’s private bank aum1 41 trillion yuan, a year-on-year increase of 24.60%, and the growth rate is still far ahead of the 11 banks.
It can be seen that the importance of Ping An Bank Co.Ltd(000001) private bank business to its large retail finance has been highlighted. By the end of 2021, the total AUM of the bank’s private banks accounted for 44% and 50% of the corresponding indicators of last year’s increment in retail respectively.
“In our income structure, the growth of non interest income is faster, especially the growth of wealth management and investment income of private banks.” At the performance conference, Ping An Bank Co.Ltd(000001) vice president and chief financial officer Xiang Youzhi introduced.
Looking forward to the future, Cai Xinfa, special assistant to the president of Ping An Bank Co.Ltd(000001) also emphasized the future growth space of the bank insurance business of Ping An Bank Co.Ltd(000001) private banks.
In addition, Bank Of Communications Co.Ltd(601328) , Industrial Bank Co.Ltd(601166) , China Minsheng Banking Corp.Ltd(600016) , China Everbright Bank Company Limited Co.Ltd(601818) asset management scale exceeded 500 billion, and AUM of the four banks increased rapidly, with year-on-year growth rates of 19.36%, 17.16%, 11.86% and 14.63% respectively.
In China Everbright Bank Company Limited Co.Ltd(601818) 2021, the asset scale of private bank managed customers exceeded 50 million yuan, and the number of private bank customers increased from 32200 in 2019 to 50000 in 2021.
In addition, according to the measures for the sale of financial products of commercial banks, it is clear that the customer standard of private banks can be set as the financial net assets of more than 6 million yuan (inclusive), but the specific implementation of this standard in various banks is not uniform, ranging from 6 million yuan to 10 million yuan.
Just because different banks have different recognition standards for private banking customers, it is difficult to sort and compare private banking businesses of different banks.
Among them, China Merchants Bank Co.Ltd(600036) private bank customer threshold is more than 10 million yuan of assets under management, which is higher than the standard of Chinese private banks. In addition, the average household assets of China Merchants Bank Co.Ltd(600036) private bank customers were also the highest, reaching 278043 million yuan.
Huatai Securities Co.Ltd(601688) on the analysis of the help of private banking business to banks, private banks, as the top brand of retail, have strong stickiness with customers and prominent brand spillover, which has a great help to promote the retail business of banks. At the same time, private bank customers are mostly entrepreneurs, with diversified needs for investment banking and corporate business. Taking private with public can also have a strong linkage between investment banking and corporate business lines.
The most important thing is that the capital occupation of private banking business is small, which contributes to the income of intermediate business and has strong anti cyclicality. It is not only the key breakthrough in the transformation of light banks, but also the key factor of the market’s valuation premium for banks.
top five banks have over 800000 high net worth customers
According to the data of various banks, the number of private bank customers in 10 of the 11 banks increased by more than 10% compared with the end of 2020.
China Everbright Bank Company Limited Co.Ltd(601818) , China Merchants Bank Co.Ltd(600036) , Ping An Bank Co.Ltd(000001) are all stock banks with the most remarkable growth rate.
Specifically, by the end of 2021, Industrial And Commercial Bank Of China Limited(601398) , China Construction Bank Corporation(601939) , Agricultural Bank Of China Limited(601288) , Bank Of China Limited(601988) , China Merchants Bank Co.Ltd(600036) private banking customers had exceeded 100000. Among them, the total number of Industrial And Commercial Bank Of China Limited(601398) is at the top of the list, and the number of private bank customers reaches 195500 China Construction Bank Corporation(601939) , Agricultural Bank Of China Limited(601288) followed, with 177200 households and 170000 households respectively China Merchants Bank Co.Ltd(600036) is 122100 households.
It is worth noting that among the top five banks, only China Merchants Bank Co.Ltd(600036) one is a joint-stock bank, and the others are large state-owned banks. It can be seen that large state-owned banks have a strong customer base for high net worth people.
There are more than 35.
Although the number of private bank customers of joint-stock banks is slightly small, the growth rate is fast. Among the 11 banks, China Everbright Bank Company Limited Co.Ltd(601818) , with a year-on-year increase of 24.7%, followed by China Merchants Bank Co.Ltd(600036) with a year-on-year increase of 22.09% and Ping An Bank Co.Ltd(000001) with a year-on-year increase of 21.6%. In addition, among the five major banks, Agricultural Bank Of China Limited(601288) private bank customers also increased by more than 20%.
Some market participants pointed out that joint-stock banks with greater pressure of “asset light” transformation have stronger willingness to develop private banks, earlier layout and less burden, which makes joint-stock banks develop rapidly on this track.
In fact, commercial banks are also facing continuous reform in the system and mechanism of private banking. In December 2021, Industrial Bank Co.Ltd(601166) private banking department was approved to open, which is the first licensed private bank of China’s joint-stock bank in recent ten years.
At present, most listed banks in China adopt the large-scale retail mode. Only Industrial And Commercial Bank Of China Limited(601398) , Agricultural Bank Of China Limited(601288) , Bank Of China Limited(601988) , Industrial Bank Co.Ltd(601166) have been approved by the central bank to prepare for the establishment of private bank franchise institutions and adopt the mode of institutions directly under the head office.
Over the past decade, the private banking business of Chinese commercial banks has developed rapidly, and the competition is becoming increasingly fierce. With different endowments, each family’s core competitiveness also has its own advantages.
For example, Industrial And Commercial Bank Of China Limited(601398) has been approved to establish a private franchise organization to manage the business separately, avoiding problems such as unclear positioning. And the bank led by the whole category of business, expanded its scale through moderate sinking and rapidly expanded its private business territory.
China Merchants Bank Co.Ltd(600036) originated from a strong retail foundation. Its private banking method is to pay attention to the single household mining of high-value customers, and also incorporate the private banking business into the big wealth framework internally.
The full license of Ping An Group provides Ping An Bank Co.Ltd(000001) operating private banking business with rich product supply and comprehensive financial service support, which also makes it a core competitiveness different from other banks.
At the performance conference, Hong Shuai, head of Ping An Bank Co.Ltd(000001) private bank, said that Ping An Bank Co.Ltd(000001) private bank, relying on the new “five in one” model, through continuous upgrading in products, teams and specialization, not only meets the personalized needs of high net worth customers, but also enables general public customers to enjoy high-quality and professional wealth management services.
Dai Xuxian, general manager of Industrial Bank Co.Ltd(601166) private banking department, once mentioned that the private banking business of commercial banks should be differentiated. The first is to provide professional services based on the resource endowment of commercial banks. At the same time, provide solutions in the non-financial field. For example, help entrepreneurs make tax planning for corporate and personal family wealth. In addition, for the fields of family health management and wealth inheritance that high net worth customers are most concerned about, tailor-made exclusive comprehensive service schemes, etc.
family trust and other inheritance tools are widely used
The generation of wealth creators is the “main force” of high net worth people, but their proportion is decreasing year by year, and the intergenerational inheritance of families is accelerating.
In October last year, Boca and Tsinghua Wudaokou jointly issued the development report of China’s private banks (2021) and the white paper on China’s private banks’ public welfare charity. Large amount insurance policies, family trusts, charitable trusts, family offices and other intergenerational family wealth inheritance tools can not only help the rational allocation, maintenance and appreciation of family wealth, but also promote the orderly inheritance of family wealth. Such inheritance tools are more widely used.
Specifically, the data show that large amount insurance policies are one of the most commonly used wealth inheritance tools for high net worth people, and 11.83% of high net worth people have large amount insurance policies; 8.58% of high net worth people have set up family trusts, and 90% of the entrusted assets are financial assets. The proportion of families that place equity assets in trusts has increased compared with last year; More than 1.5% of the people with high family net worth set up a single office, which is equivalent to the proportion of people with high family net worth of more than 1 billion.
In the 2021 annual report, many banks mentioned the family trust consulting business. For example, China Construction Bank Corporation(601939) data show that the asset management scale of Family Trust consulting business has reached 68.51 billion yuan, and the leading position has been continuously consolidated.
Ping An Bank Co.Ltd(000001) 2021 the newly established scale of family trust and insurance trust was RMB 38.017 billion, with a year-on-year increase of 88.6% Industrial Bank Co.Ltd(601166) family trust business stock management scale exceeded 16 billion yuan, the number of customers exceeded 1000, and the business scale and the number of customers doubled.
Bank Of China Limited(601988) proposed in the annual report to build a family wealth management service ecosystem with family business governance and inheritance as the core, and the number of family trust customers increased by 82% compared with the end of last year.
Bank Of China Limited(601988) Vice President Lin Jingzhen said that private banks, as the professional vanguard of wealth finance business, will give further play to the bank’s globalization and comprehensive advantages, take “group run private banks” as the strategy, build a “professional bank serving entrepreneurs” and support the national innovation and development strategy Bank Of China Limited(601988) will also further accelerate the development of family trust business, enrich and improve the family wealth management ecosystem, and serve the proper inheritance and long-term planning of family legitimate property.
Zhou Maohua told the Huaxia times that China’s commercial banks attach importance to private banking. First, the market demand is growing. With China’s sustained economic development and wealth accumulation, the demand for private wealth management and investment planning is growing rapidly. At the same time, private wealth management business belongs to asset light and high profit business. Expanding the profit space of banking business will also help to enhance the stability of bank profits; In addition, China has accelerated the opening of the financial industry to the outside world, and foreign institutions are increasingly competing in the field of private banking.
With the rapid growth of personal wealth in China, the demand of private bank customers continues to improve, which puts forward higher requirements for private banking services. The industry is also shifting from extensive scale and growth to intensive cultivation and reshaping in the new era.
