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Yang Yuzhi, who has worked in the Guangdong Branch of the Bank of China for a long time, may serve as the new president of Beibu Gulf Bank.

Text/Daily Financial Report Zhang Heng

After Li Dongguo took over from Wang Neng as chairman of Beibu Gulf Bank in June last year, the position of president of the bank also ushered in a critical moment of transition from the old to the new.

On June 14 this year, Beibu Gulf Bank issued a resignation notice stating that the bank's president Ji Zhishun had reached the statutory retirement age and submitted his resignation to the bank's board of directors, which took effect immediately. Public information shows that Ji Zhishun was born in September 1963 and had reached the statutory retirement age of 60 in September last year.

Recently, the candidate for the bank's new president has also surfaced. According to public reports from multiple media outlets, Yang Yuzhi, who has a background in a large state-owned bank and has worked in the Guangdong Branch of the Bank of China for a long time, may serve as the new president of Beibu Gulf Bank.

In fact, the report is not groundless speculation. You should know that Beibu Gulf Bank’s official microblog had previously released a message showing that on July 1, Yang Yuzhi attended a joint event with the Guangxi Branch of the Bank of China as the deputy secretary of the Guangxi Beibu Gulf Bank Party Committee. In May this year, the pre-appointment public notice of the Guangxi Regional Party Committee Organization Department also showed that Yang Yuzhi was expected to be appointed as the head of a regional enterprise.

In other words, Yang Yuzhi’s current official identity may only be the deputy secretary of the party committee of the bank, and after completing the relevant procedures, he may officially become the new president of the bank.

It is worth mentioning that in 2018, the Guangxi Autonomous Region Party Committee and Government proposed the "136" goal for Beibu Gulf Bank, namely to be light-footed within one year, achieve steady development in three years (2020), and go public in six years (2023). Luo Jun, then Party Secretary and Chairman of Guangxi Beibu Gulf Bank, said that he would resolutely implement the decisions and arrangements of the Party Committee and Government of the Autonomous Region and strive to go public as a whole in 2023.

During this period, Beibu Gulf Bank also made a lot of efforts for its IPO. For example, it has completed seven rounds of capital increase and share expansion so far, and its total share capital has increased to 10 billion shares. In July 2023, Beibu Gulf Bank completed the bidding for listing intermediary institutions, with Guotai Junan as the sponsor and Beijing King & Wood Mallesons as the law firm.

However, as of this year, Beibu Gulf Bank has still not completed the "136 target" it set initially, has not yet completed the listing guidance filing, and the listing work is still in the preparation stage.

So, in the current situation where the new top-two leadership structure has basically been finalized, will Beibu Gulf Bank continue to make a full effort to rush for an IPO?

The generals and commanders have been replaced, and it is expected that a new combination of "Li Yang" will be ushered in

Judging from Yang Yuzhi's growth experience, he is very good at learning and seizing opportunities, and his abilities are extremely strong.

Born in February 1972, Yang Yuzhi entered Guangdong International Finance School to study international finance at the age of 16. Three years after graduation, he joined the Guangzhou Branch of Bank of China as a trainee in the Comprehensive Planning Department.

For a long time afterwards, Yang Yuzhi had been working in the Guangdong Branch of the Bank of China, gaining experience step by step from the grassroots level. He had served as a clerk in the Comprehensive Planning Department of the branch, a clerk in the President's Office, a deputy section chief of the President's Office, section chief of the Secretariat, and a cadre in the President's Office. These rich grassroots experiences laid the foundation for his later promotion to middle and senior management levels.

In May 2011, after serving as the head of the Bank of China's Guangdong Branch for three years, Yang Yuzhi was transferred to the Shantou Branch for the first time. For four years, he served as president and party secretary.

During his tenure at the Bank of China Shantou Branch, Yang Yuzhi cleverly used his own advantages as a Chaoshan native, as well as the unique resources of the Bank of China's extensive overseas business network and the widespread distribution of Chaoshan merchants around the world, and successfully promoted an innovative measure initiated by the Bank of China - issuing a "Chaoshan Merchant Card" credit card tailored for Chaoshan merchants worldwide. This measure not only demonstrates Yang Yuzhi's foresight, but also opens up new channels and platforms for expanding financial services for Chaoshan merchants and entrepreneurs at home and abroad.

Not only that, Yang Yuzhi also knows the importance of learning. He continues to "recharge" during work and enriches his academic qualifications. He entered Guangdong Radio and Television University to study accounting as an undergraduate, and obtained a master's degree in economics from South China University of Technology in December 2010.

It was not until 2016 that Yang Yuzhi went to the Guangxi Autonomous Region to work as deputy mayor of Hezhou City, Guangxi, starting his eight-year political career. During this period, Yang Yuzhi was reappointed as deputy mayor and member of the party group of the People's Government of Hezhou City, Guangxi in May 2018, but his temporary position had been removed.

Now, with Yang Yuzhi coming to Beibu Gulf Bank, it also means returning to the original "starting point", the "embrace" of the banking industry that he is familiar with. The rich financial management experience accumulated in the government system and the banking field will be of great benefit to Yang Yuzhi in the future management of Beibu Gulf Bank.

The work experience of the bank's chairman, Li Dongguo, who is 51 years old and also a "post-70s" generation, also came from a large bank and has very rich experience in the banking system. He has worked in the Guangxi Agricultural Bank system for a long time and served as the president of the Agricultural Bank of China's Beihai Branch in Guangxi, general manager of the business department of the Guangxi Branch, president of the Nanning Branch, deputy president of the Guangxi Branch and many other core positions.

It is not difficult to foresee that if Yang Yuzhi is appointed as the president in the future, it will mark the formation of a new partnership between him and Li Dongguo in Beibu Gulf Bank, which is also favored by many people in the industry. This kind of cooperation established between people of similar age and based on the same experience in business development in large financial institutions usually leads to a tacit understanding, which helps both parties to work together and improve cooperation efficiency, laying a solid foundation for the implementation of Beibu Gulf Bank's business management strategy in the future.

Significant growth in operating performance, but asset quality still needs to be improved

Behind the executive personnel changes that have lasted for a year, Beibu Gulf Bank's operating performance is more worthy of our in-depth discussion. Perhaps from a series of financial statement data, we can also perceive some of the problems the bank faces on the road to IPO.

In fact, Beibu Gulf Bank is one of the few city commercial banks among many unlisted banks that discloses its financial reports in detail. What is surprising is that although it is not listed, the bank's meticulous information disclosure is already very transparent compared to many other unlisted city commercial banks.

As of the end of 2023, Beibu Gulf Bank's total assets were 471.128 billion yuan, an increase of about 13.12% from 416.491 billion yuan at the end of the previous year. The asset expansion rate is stronger than that of many listed city commercial banks in the A-share market. The steady expansion of the bank's scale is not only mainly due to the obvious location advantages of the Beibu Gulf Economic Zone and the support of many national and local government policies, but also has been deeply rooted in Guangxi, serving the local economy, and continuously improving its cross-border financial capabilities facing ASEAN and other countries. The regional deposit and loan market share ranks among the top, and it has certain regional competitive advantages.

In terms of performance, whether it is revenue or net profit indicators, the bank's performance in recent years has been remarkable, and has generally shown an upward trend year by year. Taking the past six years as a cycle node, from 2018 to 2023, Beibu Gulf Bank achieved revenue of 3.379 billion yuan, 4.783 billion yuan, 6.014 billion yuan, 7.823 billion yuan, 8.544 billion yuan and 9.838 billion yuan respectively; the net profit in the same period was 938 million yuan, 1.162 billion yuan, 1.551 billion yuan, 2.035 billion yuan, 2.534 billion yuan and 2.908 billion yuan respectively.

From a breakdown point of view, benefiting from the expansion of interest-bearing assets and the optimization of asset structure, the bank's net interest income has continued to grow, directly boosting the total operating income to continue to rise. In terms of non-interest income, the bank's net income from intermediary businesses such as agency business, bank card business, and investment banking business has fluctuated. For example, the bank's net income from fees and commissions first decreased from 287 million yuan in 2021 to 267 million yuan at the end of 2022, and then increased to 353 million yuan in 2023.

In addition, thanks to the growth in the scale of investment in trading financial assets and the improvement in investment trading capabilities, the investment income indicator, which has greatly boosted revenue, has also been growing at a relatively impressive rate. Data shows that in 2021, the bank's investment income was only 8.61%, accounting for 11% of revenue, but by the end of 2023, the indicator soared directly to 2.396 billion yuan, and the proportion increased to 24.36%.

However, we also need to pay special attention to the other side, that is, the bank's net interest margin continues to narrow, and at the same time, the large-scale credit impairment provision may have a certain negative impact on its profit realization, and profit growth faces certain pressure.

Data shows that in the past three years, Beibu Gulf Bank's net interest margin has been under pressure and has declined year by year, reaching 2.13%, 1.95% and 1.84% respectively. In this context, the bank may have maintained a large impairment provision during this period for the purpose of prudent operation. In particular, in 2023, Beibu Gulf Bank has set aside a total of 3.249 billion yuan in credit impairment losses, including 2.802 billion yuan in loan impairment losses.

In terms of asset quality, in recent years, due to the continued downward pressure on the macro economy and the continued sluggish real estate market, the operating conditions of some customers of Beibu Gulf Bank have faced certain impacts. While the scale of credit supply has grown rapidly, the scale of its non-performing loans has also increased, and the pressure on credit risk management has increased.

Financial report data over the years show that from 2018 to 2023, the bank's non-performing loan scale has increased year by year, and there seems to be no trend of reduction. It was 1.439 billion yuan, 1.786 billion yuan, 2.058 billion yuan, 2.506 billion yuan, 2.861 billion yuan and 3.649 billion yuan, respectively, with an increase of 153.58% in five years.

In addition, in recent years, Beibu Gulf Bank's non-performing loan ratio has also shown a certain trend of fluctuation, especially since 2023, due to the bank's transfer of some customers whose performance capacity has significantly declined and who are expected to be unable to repay the principal and interest of their loans normally, the non-performing loan ratio has further increased that year. Data shows that from 2018 to 2023, the bank's non-performing loan ratio was 1.53%, 1.47%, 1.3%, 1.27%, 1.25% and 1.43% respectively.

From the perspective of the industry distribution of non-performing loans, Beibu Gulf Bank's non-performing loan industries are mainly distributed in the real estate industry and wholesale and retail industry, especially the real estate industry, where the non-performing loan rate has increased significantly. As of the end of 2023, the bank's real estate industry non-performing loan rate was as high as 7.19%, an increase of 4.62 percentage points from 2.57% at the end of 2022.

In response to the above situation, Beibu Gulf Bank has also made a lot of efforts. On the one hand, it strengthened credit risk management, timely prevented new risks, and consolidated asset quality; on the other hand, it accelerated the resolution of existing risky assets, and collected and reduced non-performing assets through a combination of independent collection, litigation collection, guarantee compensation, and bad debt write-offs. The financial report shows that in 2023, the bank wrote off a total of 2.488 billion yuan in non-performing loans.

It is worth noting that as of the end of 2023, Beibu Gulf Bank's capital adequacy ratio was 13.49%, its Tier 1 capital adequacy ratio was 11.25%, and its core Tier 1 capital adequacy ratio was 9.48%, which were 1.09 percentage points, 1.37 percentage points and 1.25 percentage points higher than the corresponding ratios of 12.4%, 9.88% and 8.23% at the end of 2022, respectively.

But in fact, the bank's capital adequacy ratio has been declining for many years before and in 2021. For example, from 2014 to 2021, the problem of replenishment pressure on its core tier-one capital has always existed, and this indicator has continued to decline for 7 years.

Since 2022 until the end of last year, this key indicator of Beibu Gulf Bank has bottomed out and rebounded and continued to rise, but it is still much inferior to the arithmetic average of 20 A-share city commercial banks, and there is still room for improvement.

In its rating report on Beibu Gulf Bank issued in June this year, United Credit Rating pointed out that thanks to the completion of capital increase and share expansion and the issuance of perpetual bonds, Beibu Gulf Bank's capital level has improved, but with the continued development of its future business, its core capital still faces certain supplementary pressure.

Equity was frequently auctioned, but all ended in failure

In addition to facing certain challenges in its operating performance, Beibu Gulf Bank, which is preparing for a listing, is also facing the dilemma that its equity has been put up for auction several times but does not seem to be well received.

In March this year, Beijing Equity Exchange information showed that Beibu Gulf Bank's 330 million shares (accounting for 4.13% of the total share capital) transfer project was comprehensively solicited by the exchange. The disclosure date of this transaction is from February 28, 2024 to November 14, 2024. The transferor is the well-known A-share company Guiguan Power. The latter is the sixth largest shareholder of the bank, holding 330 million shares of the bank.

Looking back, in January last year, another shareholder, Guangxi Ziguang Zhaoxin Company, held a judicial auction of 3.3 million shares of Beibu Gulf Bank. The first auction started at an assessed price of 8.745 million yuan, but it failed. The next month, it held a second auction at 6.996 million yuan, 80% off the first auction price, but it failed again. Until May 2023, this part of the shares was sold at the second auction price for two months, but in the end, no one bid and it ended in failure.

After searching relevant information on Alibaba Auction, Daily Financial Report found that from 2016 to date, Beibu Gulf Bank’s equity has been auctioned 19 times, without any transaction and all ended in failure.

In this regard, some analysts pointed out that if the proportion of equity auctioned is small and the bank is of average qualifications, the probability of failure is very high. Because banks are also facing the problems of slowing growth and too little dividends, and the asset quality of local banks is relatively average, capital is becoming more cautious about entering the banking industry.

In general, Beibu Gulf Bank, which has seen considerable performance growth in recent years, will continue to be closely followed by Daily Financial Report as to whether it can achieve its IPO goal as soon as possible under the leadership of the new "Li-Yang" combination.

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