Saturday, 27 November 2021

(Co-published)Supporting real economy with strategic imperatives

5 min read

By The Asian Banker

China Construction Bank revealed its operating results for the first half of 2018 and announced three major strategic imperatives: Fintech, inclusive finance, and housing rental

China Construction Bank Corporation (CCB), headquartered in Beijing is one of the four mega commercial banks in China. With 14,986 banking outlets, the bank has commercial banking branches and subsidiaries in 29 countries and regions, and provides services to millions of personal customers and corporate clients.

On August 28th 2018, CCB released its 2018 interim operating results. The bank focused on supporting the real economy, preventing and controlling financial risks and deepening financial innovation. The bank adhered to steady and compliant operations, showing a steady growth in assets and liabilities, good profit growth, stable asset quality and a high capital adequacy ratio.

In the first half of 2018, the bank’s total assets amounted to $3.35 trillion (RMB22.81 trillion), representing a year-on-year increase of 3.08%, and net profit reached $37.44 billion (RMB243.62 billion), a growth of 4.83% from the previous year.

Core indicators remained steady and coordinated. The return on average assets was 1.31%, the return on average equity was 16.66%. The bank’s tier-1 ratio and common equity tier-1 ratio were 13.68% and 13.08% respectively. The non-performing loan (NPL) ratio fell 0.01 percentage point to 1.48% from the end of last year.

CCB committed to building a better life and enabling customers to enjoy the achievements of modern financial development. In the first half of 2018, the bank’s operations and innovations focused on 3 major strategies of fintech, inclusive finance, and housing rental.

Financial innovation

CCB continued to accelerate its fintech strategy to create new competitive advantages. By continuously improving its control over internet banking security and promoting security measures such as biometric authentication, CCB continued to build its proactive cloud security system. Following the launch of an online platform for comprehensive housing rental services, CCB continued to introduce and promote social platforms for smart governance, elderly care, religious affairs and community services.

On April 18th, 2018, the bank set up its financial technology (fintech) subsidiary, CCB FinTech Co. Ltd., with 3,000 employees, which is currently the largest bank-owned fintech company. The new company was formed based on CCB’s seven development centres and one research centre, and is positioned to provide software technologies, platform operations and financial information services in serving the CCB Group and other financial institutions.

At the same time, CCB opened a fully automated branch in Shanghai run solely on the power of technology. Instead of human personnel, the bank foyer is staffed by a robot, which serves as the lobby manager that it is able to communicate with customers to meet their business needs and solve their problems. Also, customers can access video teller machines (VTM) and interactive services, including both augmented reality (AR) and virtual reality (VR).

Inclusive finance

The bank proactively serves the real economy, and takes its financial services to small and micro enterprises, innovator and entrepreneurs and agriculture-related sectors as its key business focus. On May 2nd 2018, CCB convened a conference and released its inclusive finance strategy to enhance the inclusive financial services capacity. The bank adopted the strategy for supporting small industries and small enterprises. With leveraging the technology strength of the “New Generation” core banking system, the bank led in realising data information integration and optimising products including Quick Loans for SMEs, Cloud Tax Loans, collateralised fast loans, account clouds. Also, the bank initiated scorecard for small and micro enterprises, breaking through the information and credit “bottlenecks” to serve small and micro enterprises.

The bank took the lead among major domestic commercial banks to establish an inclusive finance department. Currently, there are nearly 300 small business operation centres that have been set up based on the “credit factory” model and more than 1,500 individual credit centres have been built. By the end of June 30th 2018, the balance of inclusive financial loans was $74.21 billion (RMB491.29 billion), representing a year-on-year increase of 44.33%. The number of customers with inclusive finance loans was 868,500, a year-on-year increase of 383,400.

Housing rental

As property prices rocket across China, banks are encouraged to help accelerate the development of rental markets as a way of making homes more affordable. CCB seized the opportunity of encouraging housing rental, by actively pursuing new models to develop its housing rental business and exerting its financial power to boost the structural reform of the country’s housing supply. With leveraging its accumulated housing finance advantages and the technological prowess of its new generation core system, the bank introduced comprehensive housing rental solutions and built a housing rental service platform with five systems integrated into one. The bank, cooperating with governments and enterprises, created a long-term rental community.

On June 15th, CCB launched its subsidiary, Jian Xin Housing Services Co, to focus on housing rental market. The new company created the service brand “If you want to rent, come to CCB”. So far, the bank has signed housing rental cooperation agreements with more than 300 cities, and 243 cities havealready been equipped with CCB’s online platform. It has cooperated with nearly 1,500 companies in the rental market. The platform has accumulated more than 350,000 apartments online and nearly 90,000 have been rented.

Optimising credit structure and supporting real economy

CCB continued to promote high-quality economic development. With a focus on supply-side structural reform, CCB took initiatives to meet the demands of the national economy and social development. The bank made steady progress to adjust credit structure and support the real economy.

The bank’s credit structure was constantly optimised, and the asset quality remained stable. Customer deposits amounted to $2.56 trillion (RMB16.97 trillion), representing an increase 3.68% from the end of last year. Loan growth grew steadily, the net amount of loans and advances to customers increased by $74.65 Billion (RMB494.01 billion), or 3.93% since the end of last year.

In supporting the real economy development, the bank’s loan balance in the infrastructure sector was $527 billion (RMB3,490.79 billion), accounting for 52.55% of the total loan balance. At the same time, the bank strictly implemented the list management, with a loan balance of $19.34 billion (RMB127.98 billion) for serious overcapacity industries and a loan balance of $54.42 billion (RMB360.12 billion) for real estate development, mainly supporting high-quality real estate clients and ordinary commodity housing projects. The loan balance for agriculture was $263.86 billion (RMB1,746.18 billion).

At the same time, the bank actively promoted the set-up of a national level strategic emerging industry development fund jointly with the National Development and Reform Commission. Through bonds and asset securitisation, $2.17 billion (RMB17.94 billion) was channelled into the housing rental market.

To promote the green economy, CCB leveraged its position as an exclusive lead underwriter to provide green asset-backed note issuance services to customers in the green financial reform and innovation pilot areas. The bank promoted the issuance of the first green construction Panda Bond and green bonds in the inter-bank market. Total registered green bonds reached $1.78 billion (RMB11.80 billion).

Faced with an increasingly complex external environment, the bank showed noticeable improvement in its overall strength, and made achievements in serving the real economy and proactively supporting the supply-side structural reform and critical national strategies such as the Belt and Road Initiative and the integrated development of Beijing-Tianjin-Hebei region.

With an accurate grasp of the orientation of China’s national housing policy, CCB actively explored new models for the multi-pronged, market-oriented development of its housing rental business. The bank has also taken initiatives to carry forward a strategic and systematic self-reform. It was the first among the large-scale state-owned commercial banks to establish a fintech subsidiary company. Through market-based Fintech innovation, CCB continues to push forward the reform of traditional commercial banks and leverages the power of technology to enhance its operational capabilities.



Keywords: CCB, Banks, Financial, Fintech, Security, Technology, Market, Loan, Panda Bond, Belt And Road Initiative
Institution: China Construction Bank Corporation, Jian Xin Housing Services Co, National Development And Reform Commission, Green Financial
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