Source | Laser Finance (leishecaijing)
As the largest city commercial bank in Northeast China, Shengjing Bank also changed course in a timely manner amid the turmoil in the adjustment of its Internet loan business.
"Laser Finance" learned that Shengjing Bank has actively withdrawn from the off-site Internet loan business since last year. It is still cooperating with some leading Internet platforms, but it only provides regional loans in the three eastern provinces, and is slowly withdrawing.
Internet loans, including loan assistance and joint loans, were once the biggest booster of Shengjing Bank’s consumer loan business. Since 2019, Shengjing Bank has focused on the Internet loan business. In just three years since then, its consumer loan scale has increased by more than eight times. After the suspension of off-site lending, the scale of consumer loans began to decline.
In addition to the sudden halt in the Internet loan business, Shengjing Bank, which has experienced equity transfers and executive changes, has encountered bottlenecks in performance trends and business expansion in recent years. In particular, the higher deposit cost rate on the liability side has lowered Shengjing Bank's net interest margin, making it the lowest among listed banks. Coupled with the impairment losses caused by the pressure on asset quality, Shengjing Bank's profits The level fluctuates greatly.
Take the initiative to exit and reduce risks
The issuance of new regulations on Internet loans has had a greater impact on banks in the industry that rely heavily on Internet platform loan assistance models. Due to geographical restrictions, they were forced to tighten their Internet loan business ports, and even led to a decline in the scale of their entire loan business.
Shengjing Bank is one of them.
It can be seen from the growth and decline of personal loans of Shengjing Bank in recent years that around 2019, the bank actively expanded its Internet cooperative loan business, cooperated with leading Internet platforms such as JD Finance and Ant, and mainly promoted consumption by issuing national short-term decentralized joint loans. The scale of loans and personal loans increased.
Financial report data shows that Shengjing Bank’s consumer loan scale increased rapidly in 2019, from 3.076 billion yuan in 2018 to 17.297 billion yuan, with a growth rate of 462.32%. During the same period, the proportion of consumer loans in personal loans increased from 12.08% to 30.08%.
From 2020 to 2022, the balance of personal consumption loans of Shengjing Bank was 20.673 billion yuan, 28.330 billion yuan, and 25.409 billion yuan respectively, accounting for 26.69%, 28.13%, and 25.44% of the total personal loans.
In 2022, Shengjing Bank's consumer loan balance began to decline, and the proportion of consumer loans in personal loans also declined simultaneously. Behind the data changes, Internet loans became the primary cause. Due to regulatory requirements to strengthen the localized operation of Internet loans, Shengjing Bank took the initiative to withdraw from off-site Internet personal loans, which resulted in a decrease in the scale of its consumer loans.
In the Internet loan business of Shengjing Bank, the cooperation model is mainly based on guarantee and credit enhancement. As of the end of 2022, Shengjing Bank's Internet loan balance was 25.817 billion yuan, including 9.229 billion yuan for United Loans and 15.723 billion yuan for assisted loans. Loans with guaranteed credit enhancement accounted for approximately 63% of the loan assistance business.
Since Shengjing Bank’s personal loan business mainly consists of mortgage loans and consumer loans, the impact of the new Internet loan regulations on consumer loans has also been transmitted to changes in the scale of personal loans. It can be seen that in 2019, with the help of Internet loans, the personal loan balance of Shengjing Bank reached 57.512 billion yuan, a year-on-year growth rate of 125.96%, setting a peak growth rate in recent years.
Starting from 2020, the growth rate of personal loans has slowed down significantly, and there is a trend of gradual shrinkage. In 2022, there will even be negative growth. From 2020 to 2022, the balance of personal loans was 77.458 billion yuan, 100.725 billion yuan, and 99.880 billion yuan, with year-on-year growth rates of 34.68%, 30.04%, and -0.08%.
And from the perspective of the entire loan business, the proportion of personal loans in total loans around 2019 also made a leap. However, after the proportion increased in 2019, it has been in a state of shock and there has been no obvious breakthrough.
From 2018 to 2022, the total loans of Shengjing Bank were 376.597 billion yuan, 457.202 billion yuan, 547.063 billion yuan, 586.033 billion yuan, and 613.362 billion yuan respectively; among which, the company's loan balances were 347.548 billion yuan, 372.401 yuan, 469.604 billion yuan, and 485.308 billion yuan. billion, 513.482 billion yuan, accounting for 92.29%, 81.85%, 85.84%, 82.81%, and 83.72% of the total loans.
In the past five years, the proportion of personal loans was 6.67%, 12.58%, 14.16%, 17.19%, and 16.28%. The proportion doubled in 2019 and has maintained steady growth since then, until the proportion reached its peak around the time of the promulgation of new Internet loan regulations. , and then there was a slight lack of growth momentum.
According to the relevant rating report of Shengjing Bank, Shengjing Bank has maintained strong peer competitiveness in the regions where it operates since 2022, but it has faced certain pressures in terms of customer and industry concentration risks and loan business expansion. Dismantling the loan composition of Shengjing Bank, the pressure on loan business expansion also comes from the pressure on the scale of personal loans. Affected by the narrowing of Internet loan business, the personal loan business may continue to be under pressure.
Due to the pressure of shrinking loan assistance, Shengjing Bank began to focus on the construction of self-operated business. Based on regional branches and branches, Shengjing Bank has launched 12 self-operated consumer loan products for "six customer groups and six industries" to improve the efficiency of consumer credit services and strengthen local advantages by relying on self-operated products.
Self-operated construction has a long road ahead, and it will be difficult for Shengjing Bank’s consumer loans to replicate the high growth rate achieved under the Internet loan model.
Quality is under pressure and performance is hindered
After getting rid of the shadow of Evergrande, Shengjing Bank is still faced with the problem of repairing performance and valuation.
In 2022, Shengjing Bank's Evergrande equity transfer was completed, and the proportion of state-owned shares was further increased. At the same time, the directors, supervisors and senior members were changed, and the new chairman and president were all from state-owned banks.
In July, Shengjing Bank issued an announcement stating that it had received an approval from the Liaoning Supervision Bureau of the China Banking and Insurance Regulatory Commission regarding Liu Xu’s qualifications, and that the supervision had approved Liu Xu’s qualifications as president of Shengjing Bank. Liu Xu once served as a member of the Party Committee and Vice President of Liaoning Branch of China Construction Bank. In addition, Sun Jin, the proposed chairman of Shengjing Bank, was the vice president of Bank of China Liaoning Branch.
The stable shareholder structure and more experienced management have given the outside world hope that Shengjing Bank can reverse the decline in operations and performance. As the largest city commercial bank in Northeast China, Shengjing Bank has certain advantages among its peers in terms of branch layout and licenses.
As of the end of 2022, Shengjing Bank has a total of 212 operating institutions, including 18 branches including Shenyang Branch, Beijing Branch, Shanghai Branch, Tianjin Branch, Changchun Branch and 185 sub-branches. Shengjing Bank holds a consumer finance license, Shengyin Consumer Finance.
However, in actual operations, Shengjing Bank's overall competitiveness is not optimistic due to factors such as lower interest spreads and rising non-performing ratios. According to the latest semi-annual report data, Shengjing Bank’s net interest margin narrowed to 1.3%, and its net interest margin narrowed to 1.22%, ranking at the bottom of listed banks; at the same time, its deposit cost rate was as high as 3.09%, ranking second among listed banks, and retail The time deposit cost rate is as high as 3.87%, ranking first among listed banks.
Cost pressure on the liability side still exists, loan-side pricing is still on a downward trend, and Shengjing Bank's interest margin level is already at an extremely low level, far below the bottom line requirement of commercial banks with a net interest margin greater than 1.8%. The downward pressure on interest rate spreads increased, and the performance of Shengjing Bank fluctuated significantly.
In recent years, the overall performance level of Shengjing Bank has shown a downward trend. According to the 2023 interim report information, as of the end of the reporting period, Shengjing Bank’s total assets were 1,095.165 billion yuan, an increase of 12.752 billion yuan, or 1.2%, from the end of the previous year; the net profit in the first half of the year was 790 million yuan, a year-on-year decrease of 174 million yuan, a decrease of 18.1%; operating income was 7.144 billion yuan, 937 million yuan less than the same period last year, a decrease of 11.6%, and both profit indicators fell.
Extending the time period, 2020 will be the dividing point for Shengjing Bank's sharp decline in asset quality and sharp decline in revenue and profits. From 2018 to 2022, Shengjing Bank achieved operating income of 15.885 billion yuan, 21.007 billion yuan, 16.267 billion yuan, 15.467 billion yuan, and 16.153 billion yuan, with year-on-year growth rates of 19.9%, 32.2%, -22.6%, -4.9%, 4.4 %; achieved net profits of 5.126 billion yuan, 5.438 billion yuan, 1.232 billion yuan, 431 million yuan, and 1.019 billion yuan, with year-on-year growth rates of -32.2%, 6.1%, -77.3%, -65.0%, and 136.6%.
It can be seen that the dual indicators have maintained a volatile downward trend for a long time. Although the net profit in 2022 will grow rapidly, there is still a large gap between it and the previous decline.
In terms of asset quality, from 2018 to 2022, the non-performing loan ratios of Shengjing Bank were 1.71%, 1.75%, 3.26%, 3.28%, and 3.22% respectively. It is obvious that since the non-performing ratio increased significantly in 2020, it has not improved significantly and continues to be at a low level. High level oscillation state. During the same period, Shengjing Bank's NPL ratio was also significantly higher than the average level of city commercial banks.
However, with the optimization of the ownership structure and new management at the helm, the decline in Shengjing Bank's regulatory indicators began to reverse. In the first half of 2023, Shengjing Bank's capital adequacy ratio was 12.40%, an increase of 0.88 percentage points from the end of last year; the provision coverage ratio was 142.90%, an increase of 2.6 percentage points from the end of the previous year; the non-performing asset rate was 3.17%, a decrease of 0.05 percentage points from the end of the previous year. .
After the adjustment of the Internet loan business, the incremental risks of Shengjing Bank's consumer loan assets have also been contained, and the asset quality has been significantly improved. In the first half of the year, Shengjing Bank’s non-performing loan rate for personal consumption loans was 0.82%, a decrease of 0.84% from the end of last year, a decrease of nearly 50%.
With equal emphasis on quality and scale, Shengjing Bank is expected to reach an operating turning point.