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interface news reporter | an zhen

interface news editor | jiang yiman

8on january 29, citic bank held a press conference to publish its 2024 semi-annual results.

the report shows that in the first half of the year, citic bank achieved operating income of 109.019 billion yuan, up 2.68% year-on-year; of which, non-interest net income was 36.411 billion yuan, up 10.44% year-on-year; and net profit attributable to the bank's shareholders was 35.490 billion yuan, down 1.60% year-on-year.

why did net profit decrease year-on-year?

in the first half of this year, the net profit of citic bank decreased year-on-year. liu cheng, president of citic bank, explained at the performance meeting that it was mainly because it put the improvement of risk prevention and control capabilities in a prominent position. citic bank has provided room for better risk response in the future, so it did not further lower the provision coverage ratio to supplement the bank's net profit.

liu cheng said that in the first half of this year, the banking industry faced a relatively complex and severe environment. the development of citic bank can be summarized in three words: "balanced, stable, and sustainable". citic bank insists on the balanced development of efficiency, quality, structure, scale, and customers.

"from the perspective of stability, in fact, our current conditions, including capital situation, interest rate spread and revenue situation, allow us to speed up development and expand the scale. but we did not do so. we have always believed that making up for price with volume is a lazy way, and making up for volume with price is a risky way," he said.

how is the quality performance of corporate and retail assets?

hu gang, vice president and risk director of citic bank, said when talking about corporate and retail risks and asset quality, the market is more concerned about the quality of assets related to real estate and local government platforms. overall, the scale of real estate loans is not large, accounting for only 9.5% of corporate loans, which is still declining compared with the beginning of the year, and the non-performing rate is 2.3%, which is also continuing to improve. considering the increasing policy support from the state for real estate, it is expected that the quality of real estate assets will improve further in the future. in terms of hidden debts of local government platforms, they account for 6% of corporate loans and the non-performing rate is only 0.02%; and the debt reduction effect is obvious. from october last year to now, 17.7 billion yuan of hidden debts have been replaced and 5.8 billion yuan of high-risk hidden debts have been resolved.

in terms of retail risk, the overall retail risk of the banking industry has increased since the second half of last year. we believe that at the macro level, the household leverage ratio is high, and the decline in household income after the epidemic and the depreciation of real estate have brought repayment pressure.

in terms of retail risk prevention, first, in terms of customer selection, back-end institutions are required to focus on customer repayment ability; second, the risk prevention and control system is improved. for example, in terms of credit card issuance, customer access has been optimized since 2019 to reduce high-risk customers. at the same time, the risk control model is optimized and the risk disposal of retail non-performing loans is strengthened. in the first half of this year, citic bank disposed of 28.4 billion yuan in retail loans, an increase of 7.7 billion yuan year-on-year.

when talking about the future trend of asset quality, hu gang expressed his confidence that the asset quality of citic bank will be stable and improving in the second half of the year. the confidence mainly comes from four aspects: the first is a sound business philosophy, namely, balance, stability, and sustainability, not exchanging short-term gains for risk reduction, and not exchanging profit growth for risk resistance; the second should be a sound asset quality indicator that is better than the average of peers; the third is the continuous optimization of the asset structure; and the fourth is the continuous improvement of risk management capabilities.

from the perspective of citic bank's overall asset quality, as of the end of the reporting period, the bank's non-performing loan balance was 66.58 billion yuan; the non-performing loan ratio was 1.19%, a slight increase of 0.01 percentage point from the end of last year; the provision coverage ratio was 206.76%, a decrease of 0.83 percentage point from the end of last year; the loan-to-provision ratio was 2.46%, an increase of 0.01 percentage point from the end of last year.

why did the net interest margin rebound?

zhang qing, secretary of the board of directors of citic bank, said in a performance review that citic bank adheres to the management of balanced volume and price, and continues to deepen the business strategy of stabilizing interest rate spreads. the change in interest rate spreads has outperformed the general trend for three consecutive years. the net interest margin in the first half of the year was 1.77%, up 7 basis points from the first quarter. compared with peers, the interest rate margin advantage has further expanded by 12 basis points to 23 basis points.

liu cheng believes that interest rate spread is the lifeline of bank management. for many years, citic bank has always regarded stabilizing interest rate spread as the top priority of its business, and the balance of quantity and price has become one of its business concepts. "for three years, our interest rate spread changes have been better than those of our peers. in 2022, 2023 and the first half of 2024, our changes were 6 basis points, 4 basis points and 13 basis points better than those of our peers, respectively."

when talking about specific measures, liu cheng said that this year is indeed different from previous years. in addition to benefiting from policy factors, citic bank's interest rate spread advantage is mainly due to advancement on the liability side and increased efforts on the payment side, while optimizing the structure, refining management, and improving the overall asset return level.

lu jingen, business director of citic bank, admitted that after the regulatory requirements in april to strictly investigate manual interest supplements, the market's corporate deposits fell that month, and funds showed a trend of interbank, regular and financial management. we quickly conveyed the regulatory requirements to the front line, did a good job of guiding customers and stabilized customer funds; after the cancellation of manual interest supplements, in response to the trend of interbank, regular and financial management of customers, we took advantage of the synergy of citic group and launched more fixed income + and currency wealth management products, which not only stabilized the existing funds, but also attracted some external incremental funds.