Despite uncertainties of economic recovery amid the pandemic and the competition in the domestic market, China Construction Bank (CCB) remained resilient and attained growth, according to its business performance report for the first half of 2021. The report showed that as of the end of June 2021, CCB’s total assets reached RMB 29.8 trillion ($4.6 trillion), up by 6.05% from the beginning of the year. The bank’s operating income grew 5.83% to RMB 380.91 billion ($59.1 billion) compared with the same period last year. Its net profit stood at RMB 154.11 billion ($23.9 billion), growing 10.92% over the same period last year. CCB’s operating performance ranks high among the top state-owned megabanks. 

Digital inclusive financial services support the development of SMEs

CCB has always been committed to support the development and financial inclusion of small and medium-sized enterprises (SMEs). Wang Jiang, president of CCB, said, “Increase in support of inclusive finance has brought many opportunities for the sustainable development of the bank”. After several years of exploration and leveraging big data and biometric technology, the bank has developed a one-stop mobile financial service platform for SMEs called CCB Huidongni. The platform provides around-the-clock, end-to-end online credit services to SMEs and business owners. 

As of the end of the first half of the year, the cumulative number of visits to the platform has exceeded 130 million while the number of app downloads exceeded 17 million. Moreover, one million out of the more than 5.56 million certified companies have been granted credit by the bank. Total credit balance surpassed RMB 700 billion ($108.7 billion). In addition, CCB has also established a line of product under the name “Kuaidai”, a series of inclusive financial products. As of the end of June 2021, CCB has issued a total of RMB 4.7 trillion ($730.1 billion) in inclusive financial loans to 2.1 million customers that have outstanding balance of RMB 1.7 trillion ($264.1 billion), an increase of RMB 288.3 billion ($44.8 billion) compared with the end of 2020. 

The overall non-performing loan (NPL) ratio of inclusive financial loans is around 1.3%, of which the NPL ratio of SMEs’ Kuaidai is managed to below 1%. Wang predicts that by the end of 2021, the bank will keep its overall NPL ratio for inclusive finance between 1.3% and 1.5%.

Digital transformation in retail banking saw sound results

Banks in China faced fierce competition amid the digital transformation race that started in recent years. In order to excel, CCB has actively explored digital operation modules and achieved sound results. The semi-annual report showed that the contribution of CCB’s retail banking to its total profit continued to increase, gaining 6.53 percentage points from the same period last year to 63.26%, ranking first among state-owned banks in China. 

CCB has continuously improved its ability to acquire and activate customers by building an enterprise-level customer relationship management system. The bank constructed various ecosystems, enabling it to cover both internal and external streaming. As of the end of June 2021, the number of retail customers exceeded seven trillion. 

The balance of personal deposits stood at RMB 11.2 trillion ($1.7 trillion), up 9.7% compared with the end of the previous year. Its assets under management exceeded RMB 14 trillion ($2.2 trillion). The balance of personal loans reached RMB 7.5 trillion ($1.2 trillion), growing by 4.08% over the end of the previous year. CCB won the Best Retail Bank in China at the Excellence in Retail Financial Services Awards Programme 2021 held by The Asian Banker for its robust profitability and digital operating capabilities.

Fintech strategy empowers CCB’s innovation and development

CCB has been leading the industry in terms of fintech investment and capacity building. Recently, CCB released its 2021-2025 fintech strategy, “Top+ 2.0”, where the bank stated its development goals, key tasks and safeguard mechanisms of fintech in the next five years. The bank vigorously promotes the application of fintech such as artificial intelligence (AI), blockchain, and cloud computing in various banking business scenarios. 

As of June 2021, CCB has integrated AI into the production of more than 500 business scenarios. CCB Cloud has provided support for more than 400 projects in nine major fields. There are more than one million internet of things devices that have been connected, and the blockchain platform is applied in more than 30 scenarios and 12 business categories such as trading finance and cross-border payment. Wang noted, “CCB relies on technology to enhance its service capabilities. The bank’s customer insights are more acute, product supply is more efficient, marketing services are more accurate, and risk management is smarter”. 

At the same time, CCB leverages its fintech capability in serving society as a whole. For example, the smart government service platform has 160 million registered users, and the cumulative transaction volume has exceeded 1.7 billion. It has provided overall system solutions for multiple banks and offered more than 900 small and medium-sized financial institutions export smart risk control products.

As one of the pilot banks in the trial run of China’s central bank digital currency, CCB has been involved in the research and development of digital currency since the end of 2017. As of the end of the first half of the year, the number of digital currency wallets opened in CCB reached more than seven million for individuals and 1.19 million for corporates. The cumulative number of transactions was more than 28 million, with the transaction amount of more than RMB 18 billion ($2.8 billion). The digital currency scenario covers many fields such as payments, catering services, transportation, consumer goods, and government services. Zhang Min, executive vice president of CCB, said, “The digital currency is of great significance to the payment system and has the status of legal tender, especially for improving payment efficiency and meeting the people’s needs for payment convenience”.

Resilient operation drives the bank’s sustainable growth

CCB reported that it achieved a return on assets of 1.06% and return on equity of 13.1%, rising by 1 basis point and 0.45 percentage point respectively, compared with the same period last year. Meanwhile, the bank’s asset quality remains stable. Its NPL ratio was 1.53%, down 3 basis points from the beginning of the year. The overdue ratio was 1.08%, a decrease of 1 basis point from the beginning of the year. Its provision coverage ratio was 222.4%, surging 8.8% from the beginning of the year. CCB also increased its efforts to dispose of non-performing assets. It had reached a record high disposal amount of more than RMB 87 billion ($13.5 billion), while impairment losses fell by 2.7%. 

In terms of green finance and sustainable development, CCB has actively implemented the concept of green development and strengthened the top-level design. The bank established “Emission Peak” and “Carbon Neutrality” work leadership groups. Through innovation of green financial products, it formed comprehensive and diversified service systems and green financial products such as green credit, green bonds, green trusts, and green leasing. 

CCB strengthened policy guidance and internal assessment to promote green and low-carbon transformation of the credit structure. It strengthened environmental and climate risk management and promoted climate risk stress testing. As of the end of the first half of the year, the balance of CCB’s green loans reached RMB 1.57 trillion ($244 billion), climbing 16.7% from the beginning of the year, and has further increased its proportion in the loan portfolio.

The semi-annual report of CCB undoubtedly gave investors higher expectations for the bank’s performance throughout the year. Looking forward to the whole year, Wang said, “The business performance of CCB and the future trend of the macroeconomy will remain in line. Maintaining a healthy and good profit growth in recent years can be expected”.

This is a sponsored article and does not necessarily reflect the opinion of the publisher.