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How can city commercial banks break through?

1

A transcript

A trend called "fund withdrawal order" is spreading in the financial industry.

At a relevant meeting held by the State-owned Assets Supervision and Administration Commission in early June this year, it was mentioned that, in principle, all central enterprises are not allowed to establish, acquire, or newly invest in various types of financial institutions. In principle, they are not allowed to invest in or increase their holdings in financial institutions that have little effect in serving their main industrial businesses and have greater risk spillovers.

After that, many central enterprises such as COFCO, China Telecom, and China Minmetals Corporation responded quickly and divested and transferred bank equity. At the end of June, the Beijing Equity Exchange disclosed that 82.7912 million shares of Guilin Bank (accounting for 0.91% of the total share capital) were to be transferred at a base price of 326 million yuan.

The author noted that this transfer has led to some excessive interpretation.However, it is understood that the above-mentioned equity transferor is a company under China Southern Power Grid, and the transfer is mainly to implement the requirements of central enterprises to strictly control non-core business investments.

So, what is the asset status of Guilin Bank? According to the information disclosed on the official website of Guilin Bank in the first quarter of 2024, as of the end of March 2024, the total assets of Guilin Bank and its holding village banks after consolidation were 557 billion yuan, a year-on-year increase of 10.39%; various deposits were 390.4 billion yuan, a year-on-year increase of 11.80%; various loans were 336.3 billion yuan, a year-on-year increase of 11.84%.

Among them, Guilin Bank's total assets were 522 billion yuan, a year-on-year increase of 10.80%; various deposits were 350.9 billion yuan, a year-on-year increase of 13.11%; various loans were 306 billion yuan, a year-on-year increase of 13.26%.

Looking further ahead, the 2023 annual report released by Guilin Bank shows that during the reporting period, Guilin Bank achieved operating income of 10.362 billion yuan, a year-on-year increase of 13.14%; and achieved net profit of 2.069 billion yuan, a year-on-year increase of 36.39%.

What does this performance growth rate mean? Compared with other listed city commercial banks, Guilin Bank ranks among the top in terms of both revenue growth and net profit growth.

Take the net profit growth rate for example. In 2023, Jiangsu Bank was 13.25%, Bank of Beijing was 3.49%, Hangzhou Bank was slightly higher at 23.15%, and Zhengzhou Bank even had negative growth, down 23.62%.

In addition, public data shows that at the end of 2019, the asset scale of Guilin Bank was less than 300 billion yuan, which exceeded 300 billion yuan in March 2020 and exceeded 400 billion yuan in December 2021. By the end of 2023, the total assets of Guilin Bank will exceed 500 billion yuan in one fell swoop, making it the first city commercial bank in Guangxi to enter the ranks of medium-sized banks.

As of the end of 2023, Guilin Bank ranked first among the three local city commercial banks in terms of total assets, total deposits and loans, and operating income, and its non-performing loan ratio and capital adequacy ratio performed well.
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The road to a breakthrough

Guilin Bank was established in 1997. It is a state-controlled bank with independent legal personality and is currently the single largest local legal financial institution in Guangxi in terms of assets.

From a geographical point of view, Guangxi is located on the southeast edge of the Yunnan-Guizhou Plateau, the second step of China's terrain, in the western part of the Guangdong-Guangxi hills, and on the south side of the Beibu Gulf. Such topographical features have given rise to a unique landform: continuous mountains, huge mountains, and alternating ridges and valleys.

As it is surrounded by mountains and plateaus on all sides, and has many hills and plains in the middle and southern parts, it is shaped like a basin and is therefore known as the "Guangxi Basin".

The magical landforms have given birth to rich tourism resources. There is no need to say more about the saying "Guilin's landscapes are the best in the world". The Dalongtan in Liuzhou, the Bailangtan in Fangchenggang, the Qingxiushan in Nanning and the Silver Beach in Beihai are equally beautiful.

The other side of the coin is a major agricultural province.Guangxi's production of fruits, timber, sugar, etc. ranks first in the country all year round. It is also an important base for transporting vegetables from the south to the north and the largest base for autumn and winter vegetables in the country. The proportion of rural population in the region is also higher than the national average.

In such a situation, how can Guilin Bank rise as a commercial bank?

The exploration began in 2019, when Bank of Guilin started its strategic transformation from a traditional city commercial bank to a "Three Rural Banks" serving rural revitalization. Since then, Bank of Guilin has gradually formed a four-level service network of "city-county-township-village" that integrates urban and rural areas and is unique in the national banking industry.

Specifically, in this system, the city-level branch is the brain, the county-level branch is the engine, the township micro-branch is the support, and the village-level service point is the tentacles. In this way, Guilin Bank sinks financial services to the fields.

The idea is very clever, but what is the actual effect? ​​Public data shows that as of June 30, 2024, Guilin Bank has established branches in 12 prefecture-level cities in Guangxi, 254 urban outlets (including 83 branches and 171 community/micro branches), 205 county outlets (including 79 branches, 98 community/micro branches, and 28 holding village bank outlets), 478 township outlets (including 10 branches, 402 township micro branches, and 66 holding village bank outlets), and nearly 7,000 rural inclusive financial comprehensive service points. It is worth mentioning that:

In the areas where institutions have been established in Guangxi, the bank's financial services cover 100% of counties, 66% of townships and 57% of administrative villages. Since October 2019, Guilin Bank has provided loans totaling more than 330 billion yuan to the rural revitalization sector. While promoting the sinking of financial services, it has also driven more than 30 public services and social resources to sink to rural areas at low cost and high efficiency.

Nowadays, the rural inclusive finance comprehensive service points and farmer-assisting terminals of Guilin Bank can not only transfer money, but also handle social security payment, water and electricity bill payment and other services. Farmers can handle a "package" of services such as pension insurance benefit qualification certification, flexible employment personnel provident fund payment, appointment registration, remote video consultation, entrepreneurship and employment consultation, etc. at their doorstep. It effectively reduces the pressure of government public services sinking to the grassroots and solves the problem of unbalanced and insufficient allocation of urban and rural public service resources.

Opening up the "last mile" of financial services for agriculture, rural areas and farmers - this bank has really done it!

This is also the key to the "Guiyin Speed".

3Advocate of "Rural Finance"

Looking deeper, the success of Guilin Bank is the success of its strategic choice and the full implementation of the political and people-oriented nature of financial work!

Guilin Bank is an advocate of rural finance.We have explored and formed a set of "1+6" rural financial experience practices that take into account both social responsibility and commercial sustainability, and have embarked on a new path to achieve high-quality transformation and development in financial services for rural revitalization.

On the one hand, compared with cities, rural financial infrastructure is relatively weak. Guilin Bank has set up rural inclusive financial comprehensive service points in administrative villages to ensure that financial services can be delivered directly to villagers' doorsteps.

On the other hand, Guilin Bank optimized its credit concepts and approval procedures based on the actual situation in rural areas, and lowered the loan threshold and financing costs for farmers based on real scenarios, which to a large extent resolved the contradiction between farmers' "difficulty in obtaining loans" and banks' "difficulty in providing loans".

In the process of serving rural revitalization, Guilin Bank also combines traditional rural finance with rural industrial development, and cultivates agricultural brands and industrial clusters in a targeted manner, truly realizing the goal of "deepening rural finance and serving rural revitalization."

Guilin Bank has been continuously optimizing the agricultural credit approval mechanism, adhering to the credit concept of "focusing on cash flow, business model, not only collateral, not only financial statements", simplifying farmers' credit materials, reasonably delegating credit approval authority, and formulating differentiated farmer loan review standards based on the agricultural production cycle. The fastest way is to achieve same-day loan approval upon application.

Over the past four years, Guilin Bank has provided more than 330 billion yuan in loans in areas related to rural revitalization, issued a total of 10 billion yuan of special financial bonds for the "three rural issues", and developed 73 special credit products suitable for Guangxi's rural industries, such as "Kumquat Loan" and "Chenpi Loan". By formulating "one village, one policy" and "one product, one case", it supports 40 "Guangxi Haoye" agricultural specialty brands such as Hengzhou Jasmine, Wuzhou Liubao Tea, and Baise Mango.

From 2019 to date, Guilin Bank employees have clocked in 26.2379 million kilometers in rural areas - equivalent to 656.61 laps around the earth's equator!

In the "2023 Guangxi Financial Institutions Service Rural Revitalization Assessment", Guilin Bank was once again rated as "Excellent".It is the only commercial bank to receive this honor for three consecutive years.