What is the meaning behind the layout of consumer finance by commercial banks?
On January 16, Bank Of Nanjing Co.Ltd(601009) official announced that he planned to acquire Suning Consumer Finance Co., Ltd. (hereinafter referred to as “Suning consumer finance”), becoming another urban commercial bank that won the consumer finance license after Bank Of Beijing Co.Ltd(601169) , Bank Of Shanghai Co.Ltd(601229) , Bank Of Jiangsu Co.Ltd(600919) , Bank Of Ningbo Co.Ltd(002142) , and the consumer finance license is increasingly “preferred” by banks.
In this regard, some researchers told reporters that on the one hand, due to the large interest space and fierce competition in the retail market, on the other hand, the impact of supervision on the cross regional operation restrictions of regional banks, obtaining the consumer money license is conducive to the national exhibition industry. However, some insiders remind that consumer finance is not a “universal license”. We should comprehensively consider whether our own factors can maximize the synergy. With the tightening of classified supervision, such behaviors of banks may also be affected by compliance.
Bank Of Nanjing Co.Ltd(601009) continued recovery of Suning Xiaojin
On January 16, Bank Of Nanjing Co.Ltd(601009) issued a supplementary announcement on the resolution of the board of directors, saying that the bank planned to acquire the controlling stake of Suning consumer finance. Prior to this, Bank Of Nanjing Co.Ltd(601009) disclosed the acquisition of controlling interests in participating financial institutions on January 13, but did not specify the name of the target.
As the original shareholder of Suning Xiaojin, Bank Of Nanjing Co.Ltd(601009) has invested and participated in shares since the establishment of Suning Xiaojin in 2015, and still holds 15% shares.
According to the enterprise investigation data, in addition to Bank Of Nanjing Co.Ltd(601009) , the five original shareholders of Suning Xiaojin also include Suning.Com Co.Ltd(002024) , Xiansheng zaikang Jiangsu Pharmaceutical Co., Ltd., BNP Paribas personal finance and Jiangsu Yanghe Brewery Joint-Stock Co.Ltd(002304) , with current shareholding ratios of 49%, 16%, 15% and 5% respectively.
Bank Of Nanjing Co.Ltd(601009) indicates that as of June 30, 2021, the total assets of Suning consumer gold accounted for 0.07% of the total assets of Bank Of Nanjing Co.Ltd(601009) and the shareholders’ equity accounted for 0.47%; From January to June 2021, Suning Xiaojin’s operating revenue accounted for 0.52% of the bank’s operating revenue and its net profit accounted for – 0.40%.
It is worth noting that Suning Xiaojin increased its capital and shares in October 2016, and its registered capital increased from 300 million yuan to 600 million yuan, Bank Of Nanjing Co.Ltd(601009) because the contribution was “conservative”, the shareholding ratio was diluted from 20% at the beginning of Suning Xiaojin’s establishment to 15%.
Some people in the financial industry believe that the acquisition of controlling equity may be related to the current competitive environment in the banking industry, which coincides with the plight of Suning.Com Co.Ltd(002024) the controlling shareholder of Suning consumer finance, Bank Of Nanjing Co.Ltd(601009) as a financial institution with local state-owned assets background, obtaining consumer finance license as a “Knight in white” can kill two birds with one stone.
However, Bank Of Nanjing Co.Ltd(601009) also suggests that if the subsequent acquisition is successful, this acquisition will have little impact on the bank’s operating conditions. Up to now, the counterparty and transaction proportion of this acquisition have not been determined, the bank has not signed an equity transfer agreement with any shareholder of Suning Xiaojin, and the subsequent acquisition needs to be approved by the regulatory authority.
why is the consumer money license so “fragrant” ?
In recent years, there are more and more cases of commercial banks, especially urban commercial banks, arranging consumer finance licenses. At the end of December 2021, Bank Of Ningbo Co.Ltd(002142) took over 70% equity of Huarong consumer finance under China Huarong, which also attracted market attention. According to the announcement at that time, the evaluation price of Huarong consumer finance equity was RMB 727 million, and the final transfer price was RMB 1091 million, which also meant that the bid of Bank Of Ningbo Co.Ltd(002142) was 50% higher than the transfer reserve price. As early as 2018, Bank Of Ningbo Co.Ltd(002142) tried to jointly fund the establishment of a consumer finance company with other units, but in the end, it failed because one party’s equity participation was not approved by the regulator.
Before Bank Of Nanjing Co.Ltd(601009) , Bank Of Ningbo Co.Ltd(002142) , Bank Of Jiangsu Co.Ltd(600919) , Bank Of Changsha Co.Ltd(601577) , Bank Of Beijing Co.Ltd(601169) and other urban commercial firms had gold consumption licenses. On the whole, among the 30 consumer finance companies approved to be established in China, the banking system accounts for an absolute proportion, and more than 20 banks participate in and hold shares, most of which are regional banks.
With regard to the “gold consumption fever” of urban commercial banks in the past two years, Dong ximiao, chief researcher of Zhaolian finance, told the first financial reporter that the impact of the epidemic and the economic downturn forced banks to accelerate their transformation to retail, China Merchants Bank Co.Ltd(600036) , Ping An Bank Co.Ltd(000001) etc. have proved that this is a major trend to enhance resistance to cyclical fluctuations and improve valuation; Secondly, there is a large space in the consumer finance market. After the supervision is strengthened to restrict the cross regional operation of urban commercial banks, rural commercial banks and small loan companies, the value of consumer finance companies holding national licenses is also increased.
“However, it is not easy to run consumer finance companies well. Now the industry concentration is very high. For example, Zhaolian consumer finance accounts for more than 1 / 4.” Dong ximiao believes that due to the small amount and large quantity of consumer finance business, in the face of sinking customers, Internet gene is needed as the support of exhibition industry, and financial technology empowerment is the key to obtain incremental customers and improve efficiency and reduce cost. He suggested that for small and medium-sized banks that do not have the corresponding capacity, it may be more conducive to the development of their own credit card business and on balance sheet consumer loans than obtaining the consumer finance license. Taking the performance of the first half of last year as an example, the performance of banking consumer finance companies is obviously differentiated. Among them, Zhaolian consumer finance achieved a net profit of 1.542 billion yuan, with a year-on-year increase of 166.7%, and BOC consumer finance achieved a net profit of 532 million yuan, with a year-on-year increase of 426.73%. However, in contrast, the profit amount of non head enterprises such as Changyin May 8 consumer finance and Shangyin Shangcheng consumer finance is relatively low, and the growth trend fluctuates greatly. Suning Xiaojin, which is Bank Of Nanjing Co.Ltd(601009) ready to take over fully, achieved a net profit of only 08 million yuan in 2020. It had suffered losses for two consecutive years in 2015 and 2016, and turned loss into profit for the first time in 2017. However, it has declined all the way since then, and returned to net loss again in the first half of last year.
Another unavoidable factor in the field of consumer finance is regulation. In recent years, the cbcirc has gradually tightened the examination and approval of consumer gold licenses and continuously strengthened supervision. In January 2021, the China Banking and Insurance Regulatory Commission (CIRC) issued the measures for the supervision and rating of consumer finance companies (for Trial Implementation), which classified and supervised consumer finance companies from the five indicators of compliance, risk control, service, capital and technology, superimposed the new regulations on online lending of commercial banks and the new regulations on the supervision of small loan companies. People in the industry believe that the reasonable boundary for the development of consumer finance companies is becoming clearer and clearer, The gold consumption business will compete and develop under the same track and the same regulatory rules, and the access rules will be further improved.
At present, Bank Of Nanjing Co.Ltd(601009) still has uncertainty about the acquisition of Suning Xiaojin, and the equity transfer of Bank Of Ningbo Co.Ltd(002142) Huarong Xiaojin also needs to be approved by the relevant regulatory authorities.
