On April 25, the “king of retail” online, which has attracted much market attention recently, held a quarterly performance exchange meeting.
Prior to this, Tian Huiyu, the former president of China Merchants Bank Co.Ltd(600036) who has been in office for nearly nine years, was dismissed by the board of directors on April 18, and then “guanxuan” was investigated on April 22. Since the 18th, the A-share price of China Merchants Bank has fallen 17%.
All kinds of worries came. In this regard, Wang Liang, executive vice president (presiding over the work) of China Merchants Bank, revealed at the meeting that at present, all businesses of the bank have developed steadily and all operations and management have maintained a normal state.
Wang Liang particularly stressed that “three invariants” and “five consistent adherence” are the characteristics and advantages of CMB, and the board of directors and management will adhere to them for a long time. He also said that the strategy of China Merchants Bank is very clear and firm. In the next step, the management will unswervingly implement the strategy and keep the implementation of the strategy unchanged.
Data show that in the first quarter, the bank achieved an operating revenue of 91.99 billion yuan, a year-on-year increase of 8.5%, a year-on-year increase of 12.5% to 36 billion yuan, and its operating performance was stable.
“unswervingly implement the strategy”
At the helm of CMB, Tian Huiyu left a deep impression on everyone. Therefore, his sudden “sacking” also made investors full of doubts, especially worried about the change of development ideas of China Merchants Bank.
In this regard, Wang Liang revealed that on April 18, the board of directors decided that he would preside over the work of CMB and “fully authorize him to act as president” to ensure the stability of the bank’s business team. “Over the past week, we have made concerted efforts to maintain the stable development of various businesses. At present, the operation and management are normal.”
Then, Wang Liang made the first statement. He said that “three invariants” and “five consistent adherence” are the characteristics and advantages of CMB, and the board of directors and management will adhere to them for a long time.
The so-called “five always adhere to”, that is, always adhere to the two consistent; Always adhere to the road of marketization and specialization; Always adhere to innovation driven development; Always adhere to the differentiated development strategy; Always adhere to the sound and prudent risk management concept. The reason why we can adhere to the “five always” is that “we can always maintain the president responsibility system under the leadership of the board of directors, the market-oriented incentive and restraint mechanism and the stability of cadres and talents”.
“Our bank has a good corporate governance mechanism. The board of directors will maintain the stability and continuity of the whole bank with a highly responsible attitude towards China Merchants Bank Co.Ltd(600036) and make prudent choices and decisions for the new president.” Wang Liang said.
Secondly, Wang Liang believes that China Merchants Bank established the development strategy focusing on “retail banking” business in 2004, put forward the “light banking” strategy in 2014, and put forward the 3.0 business model with “value cycle chain of big wealth management” as the core last year. These are in the same line and keep pace with the times, and are constantly improved and deepened on the basis of retail banking strategy.
“At present, retail banking business has become the ballast stone and half of our business. It has made great contributions to us in terms of scale, income, profit and brand. We will be firm in retail banking business.” Wang Liang stressed.
In addition, at the beginning of last year, China Merchants Bank formulated a new five-year development plan and proposed to become “the best value creation bank with innovation driven, leading model and distinctive characteristics”, which has achieved remarkable results since its implementation last year. Wang Liang said that in the next step, the management will unswervingly implement the strategy and keep the implementation of the strategy unchanged.
“shaping a new competitive advantage in the era of wealth management”
2021 is regarded as the first year of great wealth management of China Merchants Bank. In the past year, the bank achieved a large wealth management revenue of 52.13 billion yuan, a year-on-year increase of 33.9%, and contributed nearly 16% to the bank’s revenue.
But with Tian Huiyu’s departure, where will big wealth management go? How can China Merchants Bank continue to maintain the advantages of retail business, especially wealth management business, in the increasingly crowded track?
Zhong Desheng, assistant to the president of China Merchants Bank, revealed that with the 3.0 model as the core, China Merchants Bank is fully promoting the construction of core competence of retail business in the era of wealth management. Including:
First, accelerate the construction of customer-centered asset allocation professional capabilities. Among them, internally guide the transformation from product sales to “customer-centered” asset allocation operation mode; Externally, carry out differentiated asset allocation according to customers’ risk and return preference.
Second, build an integrated service model of “investment, business and private science” and strengthen the advantages of CMB’s private banking business. It is understood that this model comes from CMB’s insight into the customer base of private banks.
“About 70% of our private bank customers are entrepreneurs or enterprise directors and supervisors. In addition to personal wealth management needs, such customers have personalized needs in ‘people, enterprises, families and society’. Therefore, we integrate the advantages of investment banks, commercial banks, private banks and science and technology, and integrate services to form a new competitive advantage.” Zhong Desheng said.
Third, channel upgrading, through the construction of “people + digital” service mode, endow the traditional four channels with professional service connotation and channel coordination through digital way, and build the channel advantages and characteristics of China Merchants Bank in the era of wealth management.
Fourth, make the layout of wealth management in the construction of APP open platform, so that China Merchants Bank has new business ability on the new platform of wealth management. At the same time, we will increase openness, enrich cooperation institutions and provide more comprehensive and professional services.
Fifthly, through open integration, the bank’s organizational efficiency and synergy efficiency were brought into full play.
Zhong Desheng believes that in the process of strategic formulation and implementation of retail business, China Merchants Bank has accumulated and created the advantages of systematization of retail business, “which is our foundation and foundation”. Coupled with a number of core capacity-building being promoted, he was “full of confidence” in China Merchants Bank to create a new competitive advantage in the era of wealth management.
“confident to maintain the growth of non interest income”
Last year’s high base actually put a lot of pressure on the growth of China Merchants Bank’s non interest income this year.
In the first quarter, China Merchants Bank realized non interest income of 37.53 billion yuan, a year-on-year increase of 6.5%, which was weaker than the growth of revenue of the whole bank. Among them, due to the epidemic and capital market fluctuations, the income of China Merchants Bank’s wealth management decreased by 11% year-on-year in the first quarter.
Structurally, the main impact came from the income of consignment funds and trusts, and the new development fund decreased by 70% year-on-year. The head of the financial and accounting department of China Merchants Bank said that under the adverse situation of fund sales, the bank’s fund sales market share was steadily increasing, and its comprehensive competitiveness was not challenged.
At the same time, the bank’s financial management and insurance consignment income increased significantly year-on-year, which also offset the impact of the first two businesses. “Wealth management depends on whether the comprehensive allocation ability can cope with such market fluctuations.”
Data show that as of the end of March, CMB’s retail AUM (managed customer assets) reached 11.34 trillion yuan, an increase of 5.4% over the beginning of the year. Among them, AUM of sunflower and above customers increased by 4.7% over the same period, accounting for more than 70% of the total increment of retail AUM; The average AUM of private banks rose to nearly 28 million yuan.
“This shows that our systematic advantages still exist, and our customers still have high trust in us. Later, with the rebound of the capital market, the fund sales business is also expected to rebound.” The aforementioned person in charge said.
In addition to the wealth management business, the asset management business and custody business in the large wealth management sector of China Merchants Bank achieved good growth in the first quarter. Among them, the income from asset management fees and commissions increased by 47.6% year-on-year, the income from custody business increased by 11.3% year-on-year, and the balance of Custody Assets once exceeded 20 trillion yuan.
for the expansion focus of non interest business in the next stage, the person in charge said that in addition to the big wealth management sector, it will also focus on three aspects:
First, focus on integrated customer acquisition, including increasing the integration of credit and debit cards at the retail end, as well as public-private integration, and increasing the integrated operation of “private investment and business”;
Second, in terms of corporate business, in the past few years, we have increased the overall online layout, and transaction banking and cross-border financial business will become the basis for stable growth under the condition of good market situation;
Third, the Group operates comprehensively and gradually improves the comprehensive contribution of subsidiaries.
“although the growth rate of non interest income decreased year-on-year in the first quarter, and even the future situation is not optimistic, through systematic arrangements, we are confident to maintain the growth of non interest income, especially wealth management business.” The aforementioned person in charge said
“overall controllable risks of housing related business”
In terms of asset quality, in the first quarter, CMB further strictly identified non-performing loans and fully exposed risks. The ratio of loans overdue for more than 90 days to non-performing loans decreased from 69% at the beginning of the year to 58%.
On this basis, the bank’s non-performing loan ratio ended the previous “six consecutive declines” and rarely “double rises” in the first quarter. Among them, the non-performing loan ratio increased by 0.03 percentage points to 0.94% compared with the beginning of the year.
On the whole, the increase of the bank’s non-performing loans was mainly reflected in two key areas: first, the risk of real estate customers increased, and the balance of non-performing loans of real estate companies across the bank soared by 90% to 9.4 billion yuan in the first quarter; Second, due to the adjustment policy of the time point of overdue recognition, the implementation of the adverse policy of reducing the adverse effect more than 60 days overdue and the superposition of the epidemic, the newly generated adverse effect of credit cards increased by nearly 1.6 billion yuan year-on-year.
among them, for the risk exposure of real estate business, Zhu Jiangtao, vice president of China Merchants Bank, said that the bank’s judgment on the risk of real estate industry had not changed at the beginning of the year, and the bank’s risk supporting strategy had not changed. Specifically:
In terms of real estate access, China Merchants Bank implements two-level strategic customer list management and unified gate limit management at the group level;
In terms of approval process, CMB adopts the principle of Hierarchical Authorization for the approval of on balance sheet assets with credit risk undertaken by the bank, and approves separately according to double signature, joint signature and loan review meeting. Finally, the president has one vote of veto; For the approval of investment and financing in which the bank does not bear credit risk, the embedded risk team shall be given a certain authorization. If it exceeds the scope of authorization, it shall be reported to the Investment Committee for approval, and the president has one vote of veto; All consignment business shall be reported to the Commission for approval.
Zhu Jiangtao revealed that at present, the provision proportion of China Merchants Bank’s real estate business has risen to more than 10%. The newly generated bad business in the first quarter was concentrated in two or three real estate enterprises, which were all within the scope of pre judgment at the beginning of the year.
“According to personal judgment, the rise of real estate risk is closely related to the general trend, but it is generally controllable. In the follow-up, the overall risk exposure of the high probability industry will peak during the year.” Zhu Jiangtao thinks.
For the bad exposure in the credit card field, Zhu Jiangtao believes that the factors affecting the generation of bad in the first quarter will continue to affect in the follow-up. However, at the same time, the early indicators reflecting credit card risk, such as incoming call rate, M1-M3 relocation rate, recovery rate and volatility, are relatively stable.
“I personally judge that the monthly peak of credit card non-performing generation will be in August and the second highest in May, but the annual non-performing generation rate will be lower than that in 2020.” Zhujiangtao predicted.
Referring to the encouragement of the national standing committee to large banks to reduce the provision rate in an orderly manner, Zhu Jiangtao believes that the policy aims to enhance the ability of banks to provide credit and reduce the comprehensive financing cost of enterprises, but it does not mean to relax the requirements of banks to strictly abide by the risk bottom line.
Data show that in the first quarter, China Merchants Bank accrued credit impairment losses of 21.5 billion yuan, a year-on-year increase of 4.8%. “In the future, we will adhere to the consistent prudent and prudent provision policy and will not release profits by reducing impairment losses.” Zhu Jiangtao stressed.
