Fu Wanjun, President of China Everbright Bank： In the second half of the year, it faced three major challenges： difficulty in credit supply, narrowing interest margin and risk management and control.

Reporter | Zeng Yanglin

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"In 2022, all banks and financial institutions should face severe challenges." On August 29th, Fu Wanjun, executive director and president of China Everbright Bank, pointed out at the performance briefing of the bank.

Fu Wanjun believes that the challenges in the second half of the year are highlighted in three aspects. First, the lack of effective demand brings the challenge of difficult credit supply; Second, the downward trend of asset pricing has brought the challenge of narrowing the interest margin; Third, the economic downturn, risk exposure brings the challenge of risk management and control.

"On the whole, I feel that our management is confident to maintain the steady development in the first half of the year, with reasonable growth in revenue and profits and stable asset quality." He said.

In order to realize the expectation in the second half of the year, Fu Wanjun proposed six measures taken by China Everbright Bank.

First, increase investment. For commercial banks in China, the spread income represented by investment is the basic disk of the whole revenue. Therefore, on the one hand, launching is the top priority of all the work in the second half of the year. In fact, the key is to improve the industry research ability, that is, professional ability, deepen the industry and rely on professional ability to find the direction of assets, identify customers and discover assets. At the same time, we must rely on professional ability to match the corresponding products and business models to realize the landing of assets.

"In the current process of credit supply, maintaining a certain amount of credit growth is not only the one hand for financial enterprises to stabilize economic growth and do their duty well, on the other hand, their own operation and management also need this basic disk. However, in such a complicated environment, it is a challenge for every bank to find the right direction, control risks and identify customers. For Everbright Bank, I think the biggest challenge mainly comes from our ability, so we must strengthen our professional ability. " Fu Wanjun pointed out.

The second is to reduce costs. In this year’s environment, the downward trend of asset pricing is basically independent of the will of banks. To stabilize the spread, the key is to control and reduce the debt cost. On the one hand, we must strictly control high-cost liabilities, on the other hand, we must absorb more current or low-cost liabilities by expanding customer base, increasing traffic, strengthening transactions and doing more settlement. In this respect, in the second half of the year, China Everbright Bank also introduced special incentive measures to improve the demand deposits of branches and business units, so as to guide financial institutions to control the cost of liabilities.

The third is to increase revenue. In the first half of the year, in terms of wealth management income, agency and custody income, it should be said that the growth of China Everbright Bank is in the forefront of its peers, and its peers are comparable. In the second half of the year, we should still consolidate our advantages. However, at the same time, in the first half of the year, China Everbright Bank’s revenue from transaction banking, investment banking and credit cards, compared with its own budget and peers, there is still a gap in the year-on-year growth. Therefore, in the second half of the year, we must vigorously improve the shortcomings in these three aspects.

The fourth is to control risks. In fact, in the economic downturn, risk management and control ability is the core of a bank. Therefore, in the second half of the year, China Everbright Bank formulated three special attack teams and attack plans for risky assets. At the same time, in risk management and control, the more in this environment, the more refined guidance is needed when entering the market, and at the same time, the ability to identify risks should be moved forward through the construction of early warning ability for existing assets. At the same time, for customers with high risks, we must resolutely withdraw and forcibly withdraw.

Fifth, it is bad digging. As of the end of June, there were still 143 billion yuan in the case of non-performing assets of China Everbright Bank, which is a "mine". Therefore, since the beginning of this year, China Everbright Bank has actually started this task by allocating resources and concentrating its efforts. In the second half of the year, China Everbright Bank set up a special attack team to write off bad debts, so as to dig this "mine" and strive to collect bad assets through account write-offs, from which we will gain and benefit.

The sixth is to improve the ability. It turns out that many business departments and business units of China Everbright Bank are used to making indicators, and the concept of doing business has not yet been formed. Therefore, in fact, this year, China Everbright Bank is guiding everyone to change from making indicators to doing business. In this process, on the one hand, whether it is the head office departments and institutions at all levels, or the heads of financial institutions, the creation and promotion of professional ability is a key task in the future. At the same time, through digital transformation, it is in turn necessary to empower grassroots organizations and account managers.

Regarding the impact of real estate risks that the market is concerned about, Yang Bingbing, vice president and risk responsible person of China Everbright Bank, introduced at the meeting that from the current situation, China Everbright Bank has always maintained a cautious attitude towards the management of real estate industry concentration and customer access. Therefore, the scale of the bank has remained relatively stable, and its proportion in assets is not very high. By the end of June, the bank’s loan balance in the real estate industry was 187.8 billion yuan, accounting for 5.35% of the total loans. For this kind of assets, Everbright Bank has been strictly controlling the credit of highly leveraged housing enterprises and implementing unified credit management at the consolidated level. For some enterprises that are currently in danger, we have also arranged more powerful risk mitigation measures and carried out powerful pressure reduction.

"For the real estate with the risk of guaranteed delivery, the mortgage scale in our bank is still relatively small, and the risk is controllable, which will not have a great impact on the asset quality of our bank." Yang Bingbing pointed out that recently, the state has successively introduced relevant measures to stabilize the real estate market around stabilizing low prices, housing prices and expectations, supporting rigid and improved housing demand, and it is expected that the real estate industry will gradually stabilize in the future.

Yang Bingbing said that Everbright Bank will take measures to support the stable and healthy development of the real estate market, and will also pay more attention to the risk evolution trend of the real estate industry and its related fields. The measures taken by the bank mainly include four aspects:

First, it is to focus on high-quality housing enterprises and high-quality projects, and steadily promote the rational placement of real estate development financing; Second, under the premise of legal compliance and controllable risks, do a good job in financial services to ensure the delivery of buildings and stabilize people’s livelihood; Third, increase support for affordable rental housing projects and actively support the solution of housing difficulties for new citizens and young people; Fourth, pay close attention to the changes in the credit risk of individual highly leveraged real estate enterprises. Everbright Bank has also concentrated resources in the head office, conducted penetrating monitoring, dynamically examined the status of impairment provision, and actively responded to possible unfavorable situations.

For the operation of China Everbright Bank in the first half of 2022, Fu Wanjun believes that "the operating performance has maintained a good momentum of steady progress".

In terms of profitability, the semi-annual report of China Everbright Bank in 2022 shows that in the first half of the year, the bank achieved an operating income of 78.45 billion yuan, a year-on-year increase of 1.8%; The net profit was 23.45 billion yuan, a year-on-year increase of 4.1%.

In terms of the scale of assets and liabilities, as of the end of June 2022, the total assets of Everbright Bank were 6.26 trillion yuan, up 6.0% from the beginning of the year, of which the total loans and advances were 3.51 trillion yuan, up 6.2% from the beginning of the year; Total liabilities were 5.76 trillion yuan, up 6.4% from the beginning of the year, of which the balance of deposits was 3.95 trillion yuan, up 7.4% from the beginning of the year.

In terms of regulatory indicators, as of the end of the reporting period, the non-provision coverage ratio of Everbright Bank was 188.33%, an increase of 1.31 percentage points over the end of last year; The non-performing loan ratio was 1.24%, down 0.01 percentage point from the end of last year. According to the data previously released by China Banking and Insurance Regulatory Commission, by the end of the second quarter of 2022, the NPL ratio of commercial banks was 1.67%, among which the NPL ratio of joint-stock commercial banks was 1.35%, which also meant that the NPL ratio of China Everbright Bank was much lower than that of its peers.