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Tencent News "First Line"

Author: Zhu Yuting Editor: Liu Peng

Taking officePing An BankOne year after the president launched drastic reforms, Ji Guangheng delivered a semi-annual report that was not easy to achieve: in the first half of 2024, operating income was 77.132 billion yuan, a year-on-year decrease of 13.0%; net profit was 25.879 billion yuan, a year-on-year increase of 1.9%.

As the data dropped and increased, Ji Guangheng lamented at Ping An Bank's interim performance conference on August 16, "It is difficult to run a bank well, it takes three to five years, but it may only take one year to ruin it."

Ji Guangheng is an experienced financial veteran who has been working in the financial industry for nearly 30 years. His work experience covers state-owned banks, Shanghai Rural Commercial Bank, and private capital Baoneng Group. He joined Ping An Group in 2020 and served asLufax HoldingChairman, Deputy Secretary of the Party Committee and Deputy General Manager of Ping An Group.

On June 8, 2023, Ping An Bank held a board meeting to approve the appointment of Ji Guangheng as the president of Ping An Bank. People familiar with the matter told Tencent News "First Line" that Ping An Group's transfer is expected to lead Ping An Bank to continue to explore a path of reform with Ji Guangheng's rich financial experience, against the backdrop of narrowing interest rate spreads and changes in residents' wealth.

As soon as he took office, Ji Guangheng proposed the idea of ​​streamlining the head office structure, strengthening branches, and adhering to the strategic policy of "strengthening retail, refining corporate business, and specializing in the same industry", thus initiating a major change in the organizational structure.

After a year of adjustments, he said at the performance meeting that major actions have been taken at the head office level, including the reduction of departments, the reduction of cadres, and the clarification of overlapping functions.

The structural adjustment has been completed at the head office level. The bank has cut nearly 5.4% of its employees in the past six months.

"The large-scale streamlining of cadres, the need for cadres to be able to move up and down, the rejuvenation of cadres, the competition and rotation of cadres as well as legacy issues will all be resolved this year," Ji Guangheng pointed out.

From the 2024 semi-annual report data released by Ping An Bank on the evening of the 15th, it can be seen that within half a year, the number of Ping An Bank employees dropped from 42,757 to 40,452, with 2,305 layoffs. This data only includes Ping An Bank and does not include its subsidiary Ping An Wealth Management. Calculated from the data, the overall layoff ratio has reached 5.39%.

In terms of regions, Ping An Bank branches in various regions also carried out relevant layoffs, but the proportions were different. For example, the number of employees in Shenzhen Branch decreased from 4,214 to 4,024, with 190 employees laid off, accounting for 4.72%; the number of employees in Shanghai Branch decreased from 2,221 to 2,079, with 142 employees laid off, accounting for 6.83%; the number of employees in Beijing Branch decreased from 2,155 to 2,011, with 144 employees laid off, accounting for 7.16%... According to the public data in the financial report, the region with the highest layoff ratio was Hangzhou Branch, with a layoff ratio of nearly 9%.

In terms of the types of occupations that were laid off, Ping An Bank divided employees into banking business, professional and technical, and management support categories, among which the proportion of banking business employees was as high as nearly 95%. The number of employees dropped from 34,496 to 32,308, with 2,188 layoffs.

The biggest pressure comes from the significant impact of retail on revenue

Judging from Ping An Bank’s major structural adjustments, it is very determined to reform, which has also brought a significant impact on its performance.

"From the perspective of performance indicators, the biggest pressure comes from retail. The main pressure from retail comes from risk. The biggest problem with risk is that Ping An Bank did not have its own channels in the past, and the scale of external purchasing channels was relatively large." Ji Guangheng pointed out that therefore the shock to retail this year was very large, and the impact on overall revenue was also great.

The financial report shows that as of the end of June, Ping An Bank's credit card accounts receivable balance was 470.999 billion yuan, down 8.4% from the end of last year; the number of credit card accounts in circulation was 51.6558 million, down 4.1% from the end of last year; the asset scale of the credit card center also dropped from 496.451 billion yuan to 448.058 billion yuan, a decrease of nearly 10%; bank card fee income was 6.412 billion yuan, down 23.3% year-on-year, mainly due to the decline in fee income from credit card business.

In terms of revenue, Ping An Bank achieved operating income of 77.132 billion yuan in the first half of the year, a year-on-year decrease of 13.0%; and achieved net profit of 25.879 billion yuan, a year-on-year increase of 1.9%.

Ji Guangheng expressed the hope that by the end of 2024, the annual revenue decline could be narrowed to around 10% or lower.

Ji Guangheng also said at the press conference: We no longer make high-risk products (referring to credit products), so revenue has dropped rapidly. Last year, we also faced a lot of pressure from different internal voices, but we are afraid that if we make hundreds of billions of high-risk products, the situation will become unmanageable. "We need to make medium-risk products and have our own channels. This (reform) process is very painful."

Judging from the changes in the number of employees, Ping An Bank's adjustments to its retail business are also beginning to show signs.

The total number of employees at Ping An Bank's Credit Card Center decreased from 1,742 to 1,629, with 113 layoffs, accounting for 6.49%.

SixChina Merchants Bank: Becoming a CMB is a distant dream

When it comes to retail, many people first think of the "king of retail" China Merchants Bank.

At the press conference, Ping An Bank executives mentioned China Merchants Bank six times, and President Ji Guangheng said bluntly: "China Merchants Bank is a distant dream for us."

When talking about Ping An Bank's operating pressure, Ji Guangheng said that in addition to the rapid decline in revenue, another pressure comes from the rapid decline in interest rate spreads.

Data shows that the financial report shows that Ping An Bank's net interest margin in the first half of the year was 1.96%, compared with 2.55% in the same period last year, a decrease of 59 basis points.

"The interest rate spread has declined rapidly but has gradually stabilized. We are confident that it will remain stable at around 1.9%. We are also among the top joint-stock banks, or basically stable in second place. Our most advanced and most important role model bank is China Merchants Bank. Its overall interest payment cost is low, and it is a very balanced bank." said Ji Guangheng.

"The most difficult period of reform is this year. I hope that by next year the retail problems can be basically solved, and we can get back on track and achieve growth in 2026," said Ji Guangheng.