Bank of Jiangsu guards the throne of city commercial banks, what points has it overlooked?

0 1

Author丨Return to the Market  

 Editing | Sibei  

The leading position of City Commercial Bank has finally changed hands!

A few days ago, Bank of Jiangsu handed over a seemingly beautiful report card. With a revenue of 70.57 billion yuan and a net profit of 25.494 billion yuan attributable to the mother, it surpassed Bank of Beijing and sat on the throne of domestic city commercial banks.

The capital market is very divided about the current situation of Bank of Jiangsu: on the one hand, it is gratified by the wild performance, and on the other hand, it is worried about its future growth and stability.

The short-term problem of Bank of Jiangsu is that the growth rate of income is slowing down, the capital adequacy ratio is declining, and the fines are superimposed continuously. In 2022 alone, 16 fines will be issued in a row, and in 2020, there will be 31 fines in a row. The alarm bells are ringing, and the long-term problem is its growth momentum.

Since Bank of Jiangsu’s revenue and profit sources are still highly dependent on interest income, the transformation has not been successful, and its growth has been questioned.

How long can Bank of Jiangsu’s city commercial bank “throne” last?

0 1

The price of the throne: what was sacrificed?

In 2006, 10 city commercial banks including Wuxi, Suzhou, and Nantong in Jiangsu Province merged and reorganized Bank of Jiangsu. It is the only provincial legal person bank in Jiangsu Province and one of the 19 systemically important banks in the country. On January 24, 2007 It opened in Japan and was successfully listed on the Shanghai Stock Exchange in 2016. At present, it has established 4 branches outside the province in Shanghai, Shenzhen, Beijing and Hangzhou, with a strong momentum of development.

Recently, the financial report released by Bank of Jiangsu shows that its revenue in 2022 will be 70.570 billion yuan, a year-on-year increase of 10.66%; the net profit attributable to shareholders of listed companies will be 25.494 billion yuan, a year-on-year increase of 29.45%, and its revenue is stable.

As of the end of 2022, Bank of Jiangsu’s total assets were 2980.403 billion yuan, an increase of 13.80% from the end of the previous year; the balance of various deposits was 1,625.147 billion yuan, an increase of 11.99% from the end of the previous year; the balance of various loans was 1,604.189 billion yuan, an increase of 14.57% from the end of the previous year.

During the same period, the non-performing loan ratio was 0.94%, a decrease of 0.14 percentage points from the end of the previous year. It has been declining year by year since the listing seven years ago; the provision coverage ratio was 362.07%, an increase of 54.35 percentage points from the end of the previous year. The loan balance, non-performing loan ratio, overdue rate and attention rate have achieved “four reductions” compared with the end of 2021.

However, according to the financial report, Bank of Jiangsu’s revenue will increase by 10.66% year-on-year in 2022, a decrease of nearly 12 percentage points compared with 2021. The growth rate of net income dropped from 36.9% to 12.82%, a decrease of 24 percentage points, and the growth rate slowed down significantly.

Although it has an asset size of nearly 3 trillion yuan and has maintained double-digit growth in the range of 12% to 14%, there is a big gap with Yige Bank of Beijing (3.39 trillion yuan).

The financial report shows that the capital adequacy ratio of Bank of Jiangsu in the third quarter of 2022 was 13.06%, a decrease of 1.41 percentage points from 14.47% in 2020; the core tier-one capital adequacy ratio also dropped from 9.25% to 8.75%, a decrease of 0.5 percentage points, 17 Jiacheng Commercial Bank is the last, and its capital adequacy ratio at all levels has shown a continuous downward trend in the past three years. More importantly, the regulation stipulates that the core tier-1 capital adequacy ratio of domestic systemically important banks shall not be lower than 7.75%. Bank of Jiangsu is currently approaching the regulatory red line.

It is worth noting that from the perspective of the revenue structure of Bank of Jiangsu in the first quarter of this year, it is mainly composed of net interest income, investment income, fee and commission wealth management business, etc., accounting for 72.97%, 16.03% and 8.67% respectively. %. Among them, interest income is the absolute main force. 

As mentioned above, since Bank of Jiangsu’s revenue and profit sources are still highly dependent on interest income, its growth has been questioned.

As far as the banking industry is concerned, the decline in the industry’s net interest margin has become a trend, and the transformation of retail or wealth management has long been a consensus. This is the future of the industry. In this regard, Bank of Jiangsu is a laggard.

In recent years, Bank of Jiangsu’s retail loan business has achieved very little. In the first quarter of this year, Bank of Jiangsu’s retail loans were 610.5 billion, accounting for 36.29% of total loans, and the growth rate dropped from 7.67% in 2022 to about 1%.


                      Risk control alarm

The performance is outstanding, but Bank of Jiangsu has received regulatory fines frequently, and the risk control alarm has sounded.

At the beginning of 2023, due to its violation of the regulations on the management of RMB in circulation, the relevant regulations on the anti-counterfeiting of RMB, failure to submit large-value transaction reports or suspicious transaction reports in accordance with the regulations, and false publicity of financial products, the first fine of the year was confiscated. 8 million yuan; at the same time, four relevant responsible persons were fined ranging from 35,000 yuan to 50,000 yuan.

However, this punishment is not an accidental incident. In recent years, the head office and many branches of Bank of Jiangsu have been punished many times.

At the beginning of 2022, its Beijing branch failed to file in time for opening a personal bank settlement account; it was fined 1.24 million yuan for failing to perform customer identification obligations as required, and the relevant person in charge was fined 41,000 yuan; “Serious negligence was fined 400,000 yuan; in June, its Beijing branch Wangjing sub-branch and Beijing Dongsihuan sub-branch were both fined 400,000 yuan for serious violations of prudent operation rules in certain loan businesses.

According to statistics, in the whole year of 2022 alone, Bank of Jiangsu successively received 16 fines from the China Banking and Insurance Regulatory Commission for illegal granting of loans, misappropriation of loans, and “lax inspections” and other violations; in 2020, it was even worse, receiving 31 fines; According to incomplete statistics from the media, in 2021, the cumulative amount of fines will exceed 15 million yuan.

The performance is soaring and the fines are frequent. Obviously, under the aggressive expansion, the internal control management is lacking, and the alarm has been sounded.

0 3

new coach’s responsibility

In addition, Bank of Jiangsu was repeatedly named and ordered to rectify by the regulators.

In December 2022, he was ordered by the Jiangsu Securities Regulatory Bureau for 30 days because he did not implement centralized and unified access management for fund sales products, and actively recommended products or services with a risk level higher than his risk tolerance to ordinary investors. Day rectification.  

In January 2023, Bank of Jiangsu, as the lead underwriter and bookkeeper of debt financing instruments, was named and warned and ordered to rectify due to violations of relevant self-regulatory management rules in the inter-bank bond market during work.

In addition, there are 1,064 complaints from customers on the black cat complaint platform, which have been answered and processed. Credit abnormalities, etc.

For example, a complainant stated, “I received a court summons on April 4, and Jiangsu Bank sued me for arrears. The principal is 96,000, and the penalty interest is 55,000. So far, I have been negotiating with the platform to reduce the penalty interest. The principal is divided into two parts.” It will be paid off in half a year. The platform and the lender have been refusing to negotiate a reduction or exemption…the penalty interest is not reduced or exempted, I can’t afford it at all, and I won’t pay it back.”

Recently, Ji Ming, the president of the Bank of Jiangsu, who has served for seven years, resigned, and the new coach Ge Renyu took over. Facing frequent regulatory penalties and reputational risks, his top priority may be to strengthen internal compliance management and improve corporate governance, so as to give market confidence .