Banks foster new growth drivers

Retail banking, consumer finance, green lending receive emphasis

Listed large and medium-sized Chinese commercial banks are trying hard to foster new drivers of growth.

They are putting greater emphasis on retail banking and emerging business divisions like consumer finance and green lending.

China Construction Bank Corp, the country's second-largest commercial lender by assets, recently announced that its personal consumer loans reached 192.7 billion yuan ($30.6 billion) as at the end of 2017, up a whopping 157 percent year-on-year.

Its green lending, which aims to reduce pollution through financial support for environmentally friendly businesses, also increased by 13 percent to more than 1 trillion yuan.

Wang Zuji, president of China Construction Bank, said at a news conference in Beijing late last month: "Consumption has become an increasingly strong driving force for economic growth, and we consider retail banking, especially consumer finance, as a very important direction that bank loans will head for."

CCB highlighted the importance of retail banking as a way to acquire low-cost funds, Wang said, especially when commercial banks are facing strong challenges in finding sources of funds at a low cost due to the booming wealth management solutions and fintech (financial technology) companies.

Like CCB, many other listed commercial banks also enhanced their business model of mega retail and mega asset management.

Industrial and Commercial Bank of China Ltd, the country's largest State-owned commercial lender by assets, registered a net increase of 38 million retail banking customers last year. With a total of 88.59 million credit card customers, ICBC became the largest credit card issuing bank in terms of customer number in China.

Its balance of wealth management products exceeded 3 trillion yuan as at the end of 2017, up 11.4 percent from the previous year, and the income from asset management business increased by 8.6 percent.

At China CITIC Bank Corp Ltd, a Beijing-headquartered national joint-stock commercial lender, the contribution of retail banking to its net non-interest income increased by 40 percent year-on-year in 2017, as the bank stepped up efforts for business restructuring.

Last year, retail banking generated 60 percent of China CITIC Bank's net non-interest income, or 34.17 billion yuan. The bank's retail banking clients totaled 80 million, increasing at a compound annual growth rate of 17.1 percent from 2014.

Beginning this year, China CITIC Bank is implementing a new three-year development plan. Previously, it highlighted corporate banking as the main body and retail banking and financial markets business as the two wings. But in the next three years, the bank will strive for balanced development of corporate, retail and financial markets businesses.

"In particular, we will transform from 'One Body, Two Wings' to 'Troika', that is to say, develop corporate business by strengthening its distinctive features and cementing its competitive advantages; develop retail business by enhancing its services and increasing its value contribution; and develop financial markets business by activating markets and strengthening plat-forms," said its president Sun Deshun in a letter to shareholders on March 26.

Bank of China Ltd, the country's fourth-largest commercial lender by assets, also adjusted its credit structure, increasing loans to domestic strategic emerging industries by 48.7 billion yuan from the previous year to 493.1 billion yuan in 2017.

Chen Siqing, chairman of BoC, said the bank will make strides in the integration of its banking institutes.

"Rather than competing with other banks and fintech companies by building up our total assets, we'll optimize our assets, which currently stand at nearly 20 trillion yuan. We'll reduce capital occupation and increase earnings from capital occupation by improving the role of technology, so that Bank of China will become a bank on track for high-quality development," Chen said.