news

한어Русский языкEnglishFrançaisIndonesianSanskrit日本語DeutschPortuguêsΕλληνικάespañolItalianoSuomalainenLatina

The helplessness of a city commercial bank.

1

Net interest margin is at the bottom

Unease in the banking industry is growing.

Among the net interest margin data for 2023 disclosed by 42 A-share listed banks, the average net interest margin was 1.69%.This figure is 25 basis points lower than in 2022. During the same period, their net interest income fell 2.98% from 2022, the first year-on-year decline since 2017, and their fee and commission income fell 8.05% year-on-year.

In the first quarter of this year, the net interest margin of commercial banks further dropped to 1.54%. According to the agency's forecast, the net interest margin of banks is likely to fall below the 1% mark next year.

Net interest margin is a very important indicator. It refers to the ratio of a bank's net interest income to its total interest-earning assets, reflecting the bank's ability to earn net interest income through loans and investments.

At present, interest income is still the main source of income for commercial banks, and the narrowing interest rate spread is obviously not good news.

Following this indicator, we can also see the situation of different banks.

According to the analysis of Sina Finance Research Institute, the net interest margin of most of the 17 A-share listed city commercial banks declined last year.Among them, Xiamen Bank has the lowest net interest margin, which is only 1.28%.

▲Image source: Sina Financial Research Institute

Data shows that this is the largest decline in Xiamen Bank's net interest margin in the past four years, down 25 basis points from last year. This data is not only the lowest among A-share listed city commercial banks, but also the last among the 42 A-share listed banks.

This trend is still continuing. According to the Enterprise Early Warning Platform, Xiamen Bank's net interest margin further narrowed to 1.09% in the first quarter of this year.

This makes people curious, what exactly did Xiamen Bank go through?

2

Evergrande once "stepped on the thunder"

The answer can also be found in the financial report.

In response to the decline in net interest margin, Xiamen Bank gave the following explanation:

Mainly affected by factors such as the continuous reduction of LPR interest rates and the policy guidance of the reduction of existing mortgage loan interest rates, coupled with the company's active response to the country's support for the real economy and fee reduction and profit sharing policies, the average loan interest rate has dropped significantly. On the other hand, the regularization of deposits has become increasingly obvious, and the average interest rate on the asset side has dropped more than the liability side.

This is a bit implicit, let's look at the data directly. The financial report shows that in 2023, both corporate deposits and personal deposits of Xiamen Bank have increased significantly, increasing by about 32.6 billion yuan compared with 2022. At the same time, demand deposits have decreased year-on-year.

Deposits require interest payments, which also causes Xiamen Bank’s funding costs to remain high.

The result of the decline in net interest margin is also obvious. The financial report shows that the average balance of Xiamen Bank's interest-bearing assets in 2023 is 338.142 billion yuan, an increase of 8.21% over 2022. However, during the same period,Xiamen Bank's net interest income was 4.33 billion yuan, down 9.6% from 2022.

You should know that interest income is the bulk of Xiamen Bank's revenue, accounting for nearly 80%. Fluctuations in interest income are bound to have an impact on performance. In the long run, Xiamen Bank's performance has been unstable since its listing. From 2020 to 2022, Xiamen Bank's operating income grew by 23.2%, -4.32% and 10.9% year-on-year, respectively, like a roller coaster.

Xiamen Bank is also affected by real estate."Bank Financial Eyes" once did a statistics that at the end of 2021, the non-performing loan rate of Xiamen Bank in the real estate industry was as high as 3.67%, ranking first in the non-performing loan industry.

Judging from the composition of non-performing loans, the main ones involved are real estate companies that have gone bankrupt, such as Evergrande and Sunac China.

The market's concerns are also reflected in the capital market. As of the close of July 11, 2024, Xiamen Bank's share price was 5.21 yuan per share, which has fallen from its high point:

64%。

3

Pressure from "President Yao"

In addition to performance, Xiamen Bank also faces pressure from regulation.

Back in January 2023, Xiamen Bank was warned by the Fuzhou Branch of the People's Bank of China for 23 types of violations, including violations of personal financial information protection regulations. The bank also confiscated illegal gains of 767.17 yuan and imposed a fine of 7.646 million yuan.

At the same time, senior executives including Xiamen Bank Vice President Xie Tonghua, Risk Management Department General Manager Zhao Zhiyu, and Internet Finance Department General Manager Li Fei were also fined.

This is not an isolated case. According to incomplete statistics, Xiamen Bank was fined a total of 4 times in 2023, three of which were fined more than 1 million yuan.

Looking further ahead, Xiamen Bank received a total of 9 fines in 2021, with a total fine amount of 4.65 million yuan. In January 2018, Xiamen Bank was fined 24.5 million yuan for violations in its bill rediscount business.

Public information shows that Xiamen Bank was established in November 1996 and was listed on the main board of the Shanghai Stock Exchange on October 27, 2020. It is also the first listed city commercial bank in Fujian Province.

Objectively speaking, Xiamen Bank has a relatively steady pace. Looking back over the past few years, the bank has achieved good results in maintaining a low non-performing loan ratio and a smooth transition.

From the management perspective, in September 2022, Wu Shiqun, the former chairman of Xiamen Bank, submitted his resignation, and Yao Zhiping from Xiamen Jinyuan Investment Group was approved by regulators to serve as chairman in November 2022.

Information from Eastmoney.com shows that Yao Zhiping has worked in the Xiamen Branch of the People's Bank of China, the Xiamen Regulatory Bureau of the China Banking Regulatory Commission, the Xiamen Financial Work Office and other units, and is familiar with policies and regulations.

Interestingly, in the first year that Yao Zhiping took full charge of Xiamen Bank, Xiamen Bank received quite a few large fines.

It seems that facing the situation where the net interest margin is at the bottom, Mr. Yao needs to show greater courage.