An announcement on Bank Of Nanjing Co.Ltd(601009) 13 disclosed that the proposed acquisition of controlling shares in participating financial institutions has been unanimously approved by the board of directors. The reporter of Shanghai Securities News learned that the subject of Bank Of Nanjing Co.Ltd(601009) acquisition of control is Suning Consumer Finance Co., Ltd. (hereinafter referred to as Suning consumer finance). If the plan is successfully completed, Bank Of Nanjing Co.Ltd(601009) will really have a consumer finance license.
Not only Bank Of Nanjing Co.Ltd(601009) , a few days ago, Toutou City Commercial Bank Bank Of Ningbo Co.Ltd(002142) also received a consumer finance license – taking over the 70% equity of Huarong consumer finance held by China Huarong, and adding a puzzle to the layout of retail finance.
So far, urban commercial banks including Bank Of Jiangsu Co.Ltd(600919) , Bank Of Beijing Co.Ltd(601169) , Bank Of Shanghai Co.Ltd(601229) have won consumer finance licenses. Analysts said that this will help urban commercial banks broaden the territory of retail financial business and improve the layout of retail business.
proposed acquisition of consumer finance license
Suning Xiaojin, founded in May 2015, is a consumer finance company mainly sponsored by Internet retail enterprises such as Suning.Com Co.Ltd(002024) . Suning Xiaojin currently has a registered capital of 600 million yuan, Suning.Com Co.Ltd(002024) is the major shareholder, holding 49%, and Bank Of Nanjing Co.Ltd(601009) is the third largest shareholder, holding 15%.
According to the Bank Of Nanjing Co.Ltd(601009) announcement, the above acquisition has yet to sign a formal agreement, and the follow-up needs to be approved by the regulatory authority. If successfully completed, Bank Of Nanjing Co.Ltd(601009) will completely hold a consumer finance license.
As an old listed city commercial firm in Jiangsu Province, Bank Of Nanjing Co.Ltd(601009) has frequently made great efforts in the retail sector in recent years to overweight consumer finance business. The effect is obvious. The overall performance of the bank’s retail data is very strong in terms of personal banking revenue, deposit and loan scale and AUM (managed financial asset scale).
In the first three quarters of 2021, Bank Of Nanjing Co.Ltd(601009) personal banking business revenue was 6.566 billion yuan, a year-on-year increase of 34%, accounting for 22.67% of the parent bank’s revenue, an increase of 2.63 percentage points over the end of the previous year. The balance of personal deposits was 227.640 billion yuan, an increase of 10.49% over the beginning of the year, accounting for 21.72% of all deposits. The balance of retail loans was 233.601 billion yuan, an increase of 17.29% over the beginning of the year, accounting for 29.87% of all loans. By the end of the reporting period, AUM of the bank’s retail customers had reached 553.623 billion yuan, an increase of 13.66%.
Bank Of Nanjing Co.Ltd(601009) has clear logic for the development of retail sector layout and strategy.
Last spring, Zhou Wenkai, vice president of the bank, said in an interview with Shanghai Securities News that from the perspective of high-quality development of the bank, retail business is indeed indispensable, especially as a comprehensive bank, retail business is a very important sector. Therefore, based on this consideration, the market has also formed a consensus and attached great importance to retail business.
Zhou Wenkai said: “the focus of Bank Of Nanjing Co.Ltd(601009) is to build a business line. At the head office level, there should be a strong retail business segment, and then vertically empower branches to promote the development of retail business. This is a management mode combining deployment and strengthening support conditions, that is, a lot of resources, assessment and evaluation, system construction, etc. should be reasonably allocated.”
There is also a banking consumer finance company in Jiangsu Province – Suyin Kaiji Consumer Finance Co., Ltd., with a registered capital of 2.6 billion yuan and Bank Of Jiangsu Co.Ltd(600919) holding 50.1% equity. It has officially opened in Kunshan in April 2021.
help regional banks expand their business in other places
Not only Bank Of Nanjing Co.Ltd(601009) , Bank Of Jiangsu Co.Ltd(600919) , in recent years, many head city commercial banks have obtained consumer finance licenses through initiation or acquisition.
The latest example is Bank Of Ningbo Co.Ltd(002142) . At the end of 2021, Bank Of Ningbo Co.Ltd(002142) acquired 70% equity of Huarong consumer finance company held by China Huarong at a premium of 50% for RMB 1.001 billion, and obtained the coveted consumer finance license to help its big retail strategy to the next city.
The reasons why city commercial banks seek consumer finance licenses can be summarized in two aspects:
first, as far as the whole industry is concerned, under the environment of macroeconomic downturn and interest rate marketization, banks are overweight the layout of retail business, expanding wealth management business, and gradually increasing the contribution of retail business;
second, at present, the consumer credit market is still growing, which is an incremental market. However, for regional banks, there are restrictions on the expansion of relevant businesses, such as licenses and remote exhibition.
Dong ximiao, chief researcher of CMCC consumer finance, further explained to reporters that after the new regulations on Internet loans were released and implemented, the whole consumer credit business was strictly supervised, including urban and rural commercial banks. In the past, the way of cross regional operation with the help of Internet platform is now strictly limited, but consumer finance companies are national licenses and can operate across regions, The value of the license plate continues to highlight.
From this perspective, it is not difficult to understand the intention of regional banks to seek consumer licenses.
to manage well, the challenge is not small
Although the license plate is available, the challenge to do a good job is not small. By the end of last year, a total of 30 consumer finance companies had opened in China, with obvious development differentiation and a constant strength situation.
According to the statistics of zero one think tank, from the perspective of asset scale, according to the disclosed data, the average total asset scale of 20 consumer finance companies in the first half of 2021 was 25.7 billion yuan, an increase of 16.7% year-on-year compared with the first half of 2020. Among them, seven consumer finance companies, Zhaolian, immediate, Societe Generale, Bank of China, home credit, China Post and Bank of Hangzhou, were higher than the average level, and the total assets of the top seven companies reached 378.28 billion yuan, an increase of 24.3% compared with 304.27 billion yuan in the first half of 2020.
Good results in revenue and net profit are also concentrated in the hands of head consumer finance companies. As of the first half of 2021, among the 19 consumer finance companies that disclosed data, the net profits of 5 head companies accounted for 85.4% of the total net profits of 19.
Zhaolian consumer finance under China Merchants Bank Co.Ltd(600036) has been firmly in the top position all year round, regardless of asset scale, revenue and net profit. By the first half of 2021, the total assets of Zhaolian consumer finance were 129.84 billion yuan, which is the only consumer finance company with total assets exceeding 100 billion yuan.
Since the pilot in 2010, consumer finance companies have developed for 12 years, and the development of some consumer finance companies is not satisfactory. By the first half of 2021, the total assets of Suning consumer finance had declined by 69.19%, and the revenue had decreased by 58.1% year-on-year.
However, the increment of the consumer credit market is considerable, and the newcomers still have a “cake” to share. According to the report, with the gradual improvement of the credit investigation system and the joint pull of both supply and demand, it is estimated that the consumer credit balance of Chinese residents (excluding housing loans) is expected to reach 28 trillion yuan in 2025.
Dong ximiao said that it is actually very difficult to operate the consumer credit business well. There should be both scenes and small amounts of dispersion, and the customer base is relatively sinking. Therefore, it is difficult to operate well according to the traditional model without Internet gene and financial technology ability. Therefore, we can see that the “Matthew effect” of the whole industry is obvious.
