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Interface News Reporter | Zeng Lingjun

Interface News Editor | Jiang Yiman

“2024Ping An BankThe overall performance was in line with expectations. First, operating income decreased year-on-year, but net profit continued to grow. Revenue in the first half of the year was 77.1 billion yuan, a year-on-year decrease of 13%.Ping An Bank still faces a lot of pressure in its business operations.We will continue to deepen reforms, promote coordinated development among corporate and peer banks, and make every effort to improve the bank's operating performance."On August 16, Ping An Bank Party Committee Secretary and President Ji Guangheng said at the bank's 2024 mid-year performance conference.

8On the evening of the 15th, Ping An Bank(000001.SZ) disclosed its 2024 semi-annual report, showing that in the first half of this year, the bankThe operating income was RMB 77.132 billion, a year-on-year decrease of 13.0%;Shareholders' net profit was 25.879 billion yuan, an increase of 1.69% year-on-year.

August 16On the day, Ji Guangheng broughtVice President and Chief Financial Officer Xiang Youzhi, Vice President Yang ZhiqunSenior executives attended the performance meeting and answered a series of hot issues of concern to the market, including interim dividends, interest rate spreads, and real estate loans.

The reforms have met the initial expectations

Ji GuanghengAfter taking office at Ping An Bank last year, you promoted a series of reforms, such as organizational structure adjustments. What is the effect of this series of changes?

Ji Guangheng said at the performance meeting that Ping An Bank's strategic reform has always attracted widespread attention from the market. Judging from the overall progress so far, this round of reform has achieved the original expectations. The bank has achieved good results in maintaining strategic focus, optimizing business structure, strengthening coordination between the head office and branches and across departments, and promoting organizational culture construction.

Ji Guangheng said,It’s been a very fast and very hard year.For a bank, one year is a very short time, especially when the external environment is changing rapidly. It is very difficult for a bank to operate well within 3-5 years.，Of course, if a bank wants to mess up, one year is enough. During the year, we mainly carried out structural reforms. In addition, changes in the team, linkage between the head office and branches, large-scale streamlining of cadres, and the promotion and demotion of cadres and the competition and rotation of young cadres were all solved this year. The major actions have been in place at the head office level, and the basic structure of the branches was basically in place in the second quarter. Now the main focus is on operations.

"The biggest pressure this year is in the retail sector. The competition among banks is fierce, and banks are under great pressure to acquire assets. The pressure of retail transformation is relatively high, and the process is difficult. This year, it has stabilized. Corporate banking has created time and space for retail adjustments." he said.

As of the end of June 2024, Ping An Bank's personal loan balance was 1.82 trillion yuan, down 7.9% from the end of the previous year, of which mortgage loans accounted for 60.6%. Among the above personal loans, except for the housing mortgage loan balance which increased by 1% from the end of the previous year, the balances of credit card receivables, consumer loans, and operating loans all decreased from the end of the previous year. The balance of credit card receivables was 470.999 billion yuan, down 8.4% from the end of the previous year; the balance of consumer loans was 488.478 billion yuan, down 10.4% from the end of the previous year; and the balance of operating loans was 555.282 billion yuan, down 9.7% from the end of the previous year.

“This year's retail pain was very great, with a reduction of 150 billion yuan in high-risk credit products, which had a huge impact on revenue," said Ji Guangheng. Ping An Bank has been reducing high-risk credit products since 2023, which was very painful. When revenue dropped very quickly, there were also internal thoughts on whether to continue to make some high-risk products, but in the end it resisted the temptation.

heIt was also introduced that Ping An Bank flexibly responded to the challenges of the external environment, actively adjusted the customer structure, and improved the quality of business. For example, it promoted the transformation of retail business from high risk, high cost, and high return to medium risk and medium return, and gradually improved the quality of retail customer base, asset quality, and asset structure through active management. From the perspective of internal management data, the current retail loan balance competition trend and non-performing generation indicators have shown signs of stabilization and improvement.

Zhang Zhaohui, assistant president of Ping An Bank, added that retail reform is Ping An Bank's unwavering strategy, and its main breakthrough is in the L-end (retail loans), and the breakthrough of the L-end is mainly in medium-risk and medium-high-risk customer groups and product development. In addition, another focus is the establishment of self-operated channels.

Ji Guangheng said that although Ping An Bank had achieved some results in the first half of the year, there were still problems such as a decline in the scale of retail loans and a decline in the overall interest rate spread. There were some new problems in the operation process and some new changes in the market, all of which needed to be adapted and adjusted during the reform.

The interest rate spread cannot go down indefinitely

The semi-annual report shows that in the first half of 2024, Ping An Bank's net interest margin fell below 2% to 1.96%, a decrease of 59 basis points from the same period last year.Looking at the single quarter, Ping An Bank's net interest margin was 1.91% in the second quarter and 2.01% in the first quarter.

The bank said that it insisted on giving benefits to the real economy and actively adjusted its asset structure. At the same time, the net interest margin declined due to factors such as the downward trend in market interest rates, insufficient effective credit demand and loan repricing effects. At the same time, the bank said that in the context of asset repricing and supporting the real economy, asset yields may further decline, and the net interest margin is expected to continue to face downward pressure.

Ji Guangheng believes that the interest rate of foreign currencies has a great impact on Ping An Bank, but the bank has a certain degree of initiative in corporate deposits. The interest rate of RMB corporate deposits has dropped rapidly. This quarter, Ping An Bank's interest rate did not drop faster than other banks, and a very important reason for this is manual interest payment.

“We rarely make manual interest adjustments ourselves, because the proportion of deposits that require manual interest adjustments is very low. During this process, a large number of deposits came to us, so the interest rate did not drop so quickly in the past one or two months. "Ji Guangheng said.

Ji Guangheng said that the current operating pressure is mainly due to the rapid decline in revenue, and he hopes that the annual decline can be narrowed to around 10%, or even lower. Another pressure is the rapid decline in interest rate spreads. Ji Guangheng pointed out that by this month, the interest rate spread has basically stabilized.

Ji Guangheng said: "In the long run, interest rates will definitely go down, and interest rate spreads will be above a certain reasonable level. They need to be stable and cannot go down indefinitely. If banks do not have a basic interest rate spread, it will cause problems for systemic security. The interest rate spread of my country's banks is very important in terms of revenue share, and profits are a very important means of capital replenishment for banks. Therefore, I think this is a chain trap."

“If we can stabilize at around 1.9, we will also be among the top joint-stock banks, or basically stabilize in the second place. Our most important role model is China Merchants Bank, because its entire interest payment cost is low, so it is a very balanced bank. "Ji Guangheng said.

Ping An Bank's board secretary Zhou Qiang said that the banking industry is fighting a battle to defend interest rate spreads, and Ping An Bank will also strive to maintain its interest rate spreads at a relatively good level in the industry.

Will increase investment in real estate

Data disclosed in the semi-annual report shows that in 2024Year6At the end of the month, Ping An Bank's non-performing loan ratio for corporate real estate1.26%, up from the end of last year0.40The increase was mainly due to the impact of the external environment and the tight funding situation of some real estate companies, but the overall non-performing loan was still at a relatively low level.

Wu Leiming, assistant president and chief risk officer of the bank, said at the performance meeting that sales in the real estate industry fell by 25% in the first half of the year, and the capital chain of real estate companies was relatively tight, so the non-performing loans in this industry were relatively high compared with its peers.

In terms of breakdown, Wu Leiming said that there are two sectors, one is development loans; the second is using houses as collateral for financial purposes, such as commercial property loans.

"The scale of development loans is not very large, about 80 billion yuan. At present, we pay more attention to the project, region, and subject risk, and we are relatively strict in the post-loan management of projects, so overall, the asset quality performance of our area is still good."

Wu Leiming said that sales do have an impact on the quality of this asset. Its collection of funds and sales that do not meet expectations will cause pressure on this asset. "At present, it is still controllable, but if it cannot be sold in the long run, it will also cause pressure in the future. Because of the support of the state, including the white list of the real estate coordination mechanism and other measures are also promoting delivery and sales, so we are also actively participating. Although there is pressure at present, it is relatively normal."

Wu Leiming further explained that there are more than 170 billion yuan of commercial property loans, mainly for office buildings and shopping malls. At present, both the occupancy rate and the rent level are still greatly affected. "Our repayment source is mainly based on rent and operating cash flow. Although we can pay the interest now, this cash flow is still greatly affected, and the pressure in the future will still exist."

However, the bank will still increase its investment in real estate. "Real estate has always been our main sector, and we will definitely increase our support and investment in real estate. Now that the country has so many policies, including coordination mechanisms and white lists, we will actively participate. Our investment in the white list has always been at the forefront among banks, and we will also meet the reasonable needs of enterprises of different ownership structures equally." Wu Leiming said.

The interim dividend ratio reached 18.4%

The semi-annual report shows that Ping An Bank paid a cash dividend of RMB 2.46 (including tax) per 10 shares to all shareholders. No bonus shares were issued and no capital increase was made by converting the provident fund. The total cash dividend was RMB 4.774 billion, accounting for 18.4% of the net profit attributable to the bank's shareholders in the consolidated financial statements.

Ji Guangheng gave a detailed answer to the dividend policy that the market is concerned about. He first emphasized several major considerations, including relatively stable profit growth, capital stability, bank wishes, regulatory policies and market expectations.

“Our capital adequacy ratio is still good this year. We will comprehensively evaluate the relationship between capital business development and shareholder returns, do our best and maintain a reasonable level of annual dividends. "Ji Guangheng revealed that Ping An Bank set the dividend ratio range for the first half of 2024 between 12% and 30%, and the interim report is 18%.

Ping An Bank's board secretary Zhou Qiang said when discussing dividends: "The 18% in the interim report is by no means equivalent to 18% in the annual report. These are two different concepts. The interim report is more of an attitude, leaving some room for the dividends in the annual report, and striving to create better investment returns for investors."