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interest rates have been repeatedly lowered, credit limits have been increased... banks have taken drastic measures, and personal loan marketing has become increasingly "involuted". as the mid-term performance of a-share listed banks in 2024 "comes to an end", we can also get a glimpse of the bank's personal loan issuance map. on september 1, a beijing business daily reporter found that most listed banks showed strong growth momentum in personal loan business, especially in personal consumption loans and personal business loans, but under the "surge", loan quality has declined and potential default risks have gradually increased.

the scale of consumer loan and business loan

in order to adapt to changes in the market environment and enhance their own competitiveness, personal loans have become the focus of banks' business development, especially personal consumption loans and personal business loans. according to the mid-term performance data disclosed by 42 listed banks, many banks' personal loan businesses have shown a growth trend, especially in personal consumption loans and personal business loans.

as of the end of june, the personal loans of the agricultural bank of china increased by 592.178 billion yuan, an increase of 7.3% compared with the end of the previous year. among them, personal consumption loans increased by 26.5% and personal business loans increased by 28.4%, mainly due to the bank's continued increase in inclusive loans. the personal loans of the industrial and commercial bank of china increased by 180.922 billion yuan, an increase of 2.1% compared with the end of the previous year. although the overall growth rate was not high, personal consumption loans and personal business loans still achieved "double-digit" growth of 17.4% and 16.7% respectively.

the personal loans and advances of china construction bank were 8.76 trillion yuan, an increase of 81.682 billion yuan, or 0.94%, from the end of the previous year. among them, personal business loans were 885.767 billion yuan, an increase of 108.286 billion yuan, or 13.93%, from the end of the previous year; personal consumption loans were 480.597 billion yuan, an increase of 58.974 billion yuan, or 13.99%, from the end of the previous year. bank of communications was no exception, with personal business loans increasing by 31.406 billion yuan, or 9.14%, and personal consumption loans increasing by 46.571 billion yuan, or 26.85%, from the end of the previous year.

joint-stock banks, urban and rural commercial banks also showed a step-by-step growth trend. the personal consumption loan balance of china merchants bank, the "king of retail", was 377.745 billion yuan, an increase of 25.27% over the end of last year; the personal consumption loan balance of hua xia bank was 105.591 billion yuan, an increase of 1.02% over the end of last year; and the retail loans (including personal housing loans and personal consumption loans) of china zheshang bank increased by 2.71% over the end of last year.

the balance of guiyang bank's personal comprehensive consumer loans (excluding credit cards) was 3.042 billion yuan, an increase of 23.11% from the beginning of the year. in the first half of 2024, under the initiative to boost consumer credit, ningbo bank's total personal loans amounted to 523.148 billion yuan, an increase of 3.14% from the beginning of the year, of which the balances of personal consumer loans and individual business loans were 331.815 billion yuan and 99.082 billion yuan, respectively, both of which increased from the end of the previous year. from a more detailed perspective, the balance of shanghai bank's new energy vehicle consumer loans was 12.855 billion yuan, an increase of 7.76% from the end of the previous year. the balances of personal consumer loans or personal business loans of banks such as shanghai rural commercial bank, qingdao rural commercial bank, and suzhou rural commercial bank are also on the rise.

however, despite the significant growth of most banks, some banks have adopted a more cautious personal loan risk management strategy. in the first half of the year, qingdao bank took the initiative to adjust the structure and total amount of internet loans and tightened its credit card risk strategy. as of the end of june, the balance of personal consumption loans was 20.323 billion yuan, a decrease of 1.519 billion yuan from the end of last year, a decrease of 6.96%; the proportion of personal consumption loan balance of xi'an bank decreased from 16.27% at the end of last year to 13.72%, and the loan balance also decreased from 33.02 billion yuan to 29.474 billion yuan.

wang pengbo, chief analyst of the financial industry at broadcom consulting, believes that as the economic environment further improves, personal consumption capacity and corporate business activities will continue to grow, and personal loan business still has a large room for development. however, banks also need to be vigilant about the potential risks brought by excessive lending, ensure loan quality, and avoid rising non-performing asset ratios.

the risk of "sequelae" of internal circulation emerges

against the backdrop of promoting a recovery in the consumer market, the "price war" among banks for personal loans has intensified. from a profit perspective, there is nothing wrong with expanding new channels to increase business scale, but after the "involution" and aggressive marketing, a series of problems have begun to emerge: excessive lending will increase the bank's own operating risks. the more loans, the greater the potential risk of default, which may lead to a decline in asset quality.

judging from the performance of the six state-owned banks, although the overall asset quality is stable, there are still some risks in the field of personal loans that cannot be ignored. take bank of china as an example. as of the end of the first half of the year, the bank's personal loan non-performing rate was 0.88%. although it was at a relatively low level, it was higher than 0.76% at the end of the previous year; the non-performing rates of personal housing loans, personal card overdrafts, personal consumption loans, and personal business loans of the agricultural bank of china all increased, among which the non-performing rate of personal consumption loans was 1.17%, an increase of 0.13 percentage points from 1.04% at the end of the previous year.

the industrial and commercial bank of china's personal non-performing loans were 79.419 billion yuan, an increase of 18.662 billion yuan, and the non-performing rate was 0.9%, up 0.2 percentage points; the personal overdue loan rate of bank of communications was 2.22%, up 0.29 percentage points from the end of last year; the non-performing rate of personal small loans of postal savings bank of china was 1.88%, compared with 1.73% at the end of last year; the non-performing rate of personal loans and advances of china construction bank was 0.84%, which also rose.

the same is true for many joint-stock banks. ping an bank's personal loan non-performing rate is 1.42%, up 0.05 percentage points from the end of last year. the bank mentioned that the repayment ability of some individual customers is still in the process of recovery, and the personal loan non-performing rate has increased. hua xia bank's personal loan non-performing loan rate is 2.18%, up 0.49 percentage points from the end of last year; minsheng bank's personal non-performing loans totaled 29.631 billion yuan, an increase of 2.776 billion yuan from the end of last year, and the non-performing loan rate was 1.69%, up 0.17 percentage points from the end of last year; china merchants bank's retail non-performing loan rate was 0.9%, up 0.01 percentage points from the end of last year.

in response to retail risks, industrial bank emphasized optimizing the whole process control of retail credit from aspects such as product design, risk control logic, process control, model strategy, etc. as of the end of the first half of the year, the bank's personal business loan non-performing rate was 0.8%, up 0.01 percentage point from the end of the previous year; the balance of personal consumption loans (domestic and excluding subsidiaries) was 90.915 billion yuan, with a non-performing rate of 1.78%, up 0.08 percentage point from the end of the previous year.

in-depth analysis shows that despite the increase in non-performing loan rates, the non-performing loan rates of most banks' personal loans remain at a relatively low level. this is also due to the banks' adoption of active risk management measures, such as adjusting customer structure, strengthening asset structure optimization, and increasing efforts to deal with non-performing loans.

by timely adjusting credit policies and credit structures, strengthening risk management of existing credit assets and other measures, the non-performing loan ratio of qingdao rural commercial bank's personal business loans dropped from 2.04% at the end of last year to 1.83%, but the bank's personal consumption loan non-performing rate rose from 1.71% to 2.06% at the end of the first half of the year; the non-performing rate of shanghai bank's personal loans and advances was 1.11%, up 0.22 percentage points from the end of last year. the bank pointed out that judging from the overall trend in the first half of the year, the asset quality in the second quarter has stabilized compared with the first quarter, and the generation of non-performing loans has decreased quarter by quarter. the bank will continue to deepen the adjustment of customer base and asset structure, further improve risk management measures, and maintain the relative stability of personal loan asset quality.

the problem of a sharp drop in average interest rates

after the credit card business said goodbye to high-speed growth and personal housing mortgage loans came off the "pedestal", the industry regarded personal consumption loans and personal business loans as "rising stars" that drive high growth in banks. however, from the current situation, the price war of personal loans has also led to thinning of bank profits.

the average personal loan interest rate of the state-owned banks has declined. the average personal loan interest rate of the bank of china is 3.94%, down 68 basis points from 4.62% in the same period last year; the average personal loan yield of the agricultural bank of china is 3.9%, compared with 4.41% in the same period last year. the average personal loan yields of the postal savings bank of china, the bank of communications, the china construction bank, and the industrial and commercial bank of china are 4.37%, 4.19%, 4%, and 3.8%, respectively, down 58 basis points, 46 basis points, 59 basis points, and 62 basis points from the same period last year.

among the joint-stock banks, the personal loan yields of ping an bank, china everbright bank, china zheshang bank, industrial bank, citic bank, china merchants bank and china minsheng bank also declined, at 5.9%, 5.78%, 5.52%, 5.21%, 5.02%, 4.71% and 4.66%, respectively, down 101 basis points, 14 basis points, 69 basis points, 44 basis points, 49 basis points, 45 basis points and 42 basis points from the same period last year.

ping an bank pointed out that the reason for the decline in the average yield of personal loans is that the bank adheres to the policy orientation of giving benefits to the real economy and continues to increase credit support for key areas such as manufacturing and green finance; at the same time, it actively adjusts the asset structure to increase the proportion of high-quality assets; the loan market benchmark rate (lpr) has been lowered, coupled with insufficient effective credit demand, the interest rate of newly issued loans has fallen year-on-year, and the average loan yield has fallen overall due to the impact of loan repricing. citic bank said in its semi-annual report that personal loan interest income decreased by 1.3 billion yuan.

among the city and rural commercial banks, the average yield on personal loans and advances of shanghai bank fell by 0.44 percentage points; the average interest rate on personal loans of ningbo bank was 5.93%, a year-on-year decrease of 60 basis points; the average yield on personal loans of shanghai rural commercial bank was 5.16%, compared with 5.37% in the same period last year; the average yield on personal loans of qingdao rural commercial bank fell by 47 basis points compared with the same period last year.

it can be seen that the decline in the yield of individual bank loans is the result of the combined effect of multiple internal and external factors. on the one hand, when the lpr declines, the interest rate of new loans issued by banks will usually decline accordingly. in addition, with the adjustment of the lpr, the existing loans will also be affected during the repricing cycle, thereby lowering the overall loan yield. on the other hand, some banks will adjust their asset allocation according to market conditions and risk preferences, reduce the proportion of high-risk and high-yield assets, and instead increase more stable but relatively low-yield assets. this strategy may lead to a decline in overall yields.

jinle function analyst liao hekai suggested that in the context of declining cost-benefit ratios for individual loans, banks should find new growth points and maintain stable operating conditions. for example, adopt a more refined risk pricing model for different customer groups and loan types to ensure that pricing can both cover costs and attract customers. expand non-interest income sources, develop intermediary businesses such as wealth management and fund sales, and increase commission and service fee income.

beijing business daily reporter song yitong