Tuesday, 11 February 2025

Bank of Jilin to rebuild China’s rustbelt

5 min read

By Ruoxin Qi

Qin Jizhang, chairman of Bank of Jilin since May 2023, has rebuilt the bank’s balance sheet and set a new direction pivoting from corporate lending to retail and small businesses to align with Jilin province’s economic revival.

Qin Jizhang was appointed chairman of Bank of Jilin in May 2023, inheriting a bank on the brink of collapse. With nearly two years of experience on the bank’s board during the COVID-19 period, Qin brought with him his expertise in retail and small business banking, honed during his tenure at China Merchants Bank. 

In 2023, Bank of Jilin retired RMB 5.9 billion ($814 million) in non-performing loans (NPL), lowering its NPL ratio to 1.39% by mid-2024, and setting the stage for a new phase in the bank’s transformation. The fortunes of Bank of Jilin are tightly connected to Jilin province, which has undergone significant challenges.

Jilin province’s economy has unique characteristics, shaped by its industrial legacy and agricultural richness. Historically, Jilin was an industrial powerhouse during the planned economy era, particularly in vehicle manufacturing, chemicals and pharmaceuticals. It also remains one of China’s largest producers of agricultural products, benefiting from its fertile black soil. Once considered "the firstborn of the country," Jilin played a vital role in China’s economy through its primary and secondary industries.

However, with China’s transition to a market economy, Jilin faced significant setbacks. While coastal regions in the south thrived on foreign trade, Jilin, bordered only by Russia and North Korea, had limited opportunities. Increased competition led to the collapse of less competitive state-owned enterprises, triggering mass layoffs. Harsh winters and challenging conditions hindered direct investment, while the younger populace left for opportunities elsewhere, reducing the local population from 27.5 million in 2010 to 23 million in 2023. 

Despite these challenges, Jilin retained its environmental quality by avoiding the "manufacture, pollute, then rehabilitate" path common in many industrial regions. This preserved environment has supported growth in winter tourism, which, along with robust agricultural output, has provided an economic silver lining.

Bank of Jilin was founded under such a backdrop in 2007, from the merger of various city banks and credit unions across the province, to support the shifting economic landscape. Over the past 17 years, it has become the largest financial institution in Jilin, serving more than 12 million retail customers and nearly 260,000 corporates, and is responsible for over 50% of all new loans approved annually in the province.

Bank of Jilin’s self-directed overhaul restored stability

Prior to Qin’s arrival, Bank of Jilin faced serious risk management issues typical of smaller city and rural commercial banks. In 2020, it was identified as a high-risk financial institution by the People’s Bank of China (PBoC), with NPL ratio of 4.39%. Despite the state’s involvement as shareholder, the bank did not receive a straightforward bailout, but instead pursued a self-directed turnaround strategy.

Bank of Jilin formed a special asset management unit to focus on distressed assets, operating under the philosophy of "saving corporate clients is saving the bank”. This strategy included capital replenishment, restructuring and mitigating risks by clearing backlogs of uncollected interest, watch-listed loans and deferred loans. These actions successfully reduced the NPL ratio to 1.39% by mid-2024, while increasing provision coverage to 185.62%, thereby restoring the bank’s stability.

Qin and his management team presented the bank’s overall strategy for the future, highlighting programmes to retrain employees and build a robust technology platform.

Future hinges on growth and adaptability

Qin's vision for Bank of Jilin represents both significant opportunities and potential risks. The bank's strategic focus on aligning with Jilin's economic shifts reflects a timely response to broader macroeconomic trends and a broader attempt to revitalise both the bank and the regional economy of Jilin province.

The emphasis on reducing risk, enhancing digital infrastructure and expanding into retail and small business sectors signifies a clear pivot towards sustainable growth. While challenges remainespecially given the province's unique history and constraintsthe proactive transformationexhibited by the bank are still promising. The focus on talent, technology and regional development may well position Bank of Jilin as a future model for city commercial banks nationwide, provided it maintains its current momentum and adaptive strategies. However, the road ahead demands vigilance and continuous adaptation to ensure that its recovery is not just short-lived but truly transformative.

Transcript of the full interview with Qin Jizhang, chairman of Bank of Jilin:

Emmanuel Daniel (ED): How does Bank of Jilin drive Jilin’s economic growth, and what are its key business and customer base characteristics?

Qin Jizhang (QJZ): Bank of Jilin is the only city commercial bank in Jilin province. After 17 years of development, especially in recent years, it has surpassed its local peers in assets and deposits, becoming the largest financial institution in the province and playing a primary role in supporting Jilin’s economic and social development.

As of June 2024, the bank’s total assets stood at RMB 722 billion ($101 billion), ranking 18th among city commercial banks nationwide. It held deposits of RMB 551 billion ($77 billion), with deposits in the province amounting to RMB 540 billion ($76 billion), accounting for 14.29% of total deposits and 35.18% of deposit growth. Loans totalled RMB 473 billion ($66 billion), with RMB 432 billion ($61 billion) in the province, representing 14.97% of the total loan market and 47.82% of loan growth.

The bank now serves over 12.257 million retail clients, covering more than 50% of Jilin’s population, alongside 255,900 corporate clients and over 300 interbank credit clients, with cumulative credit of over RMB 300 billion ($42 billion).

In the first half of 2024, Jilin’s gross domestic product (GDP) grew by 5.7% year-on-year, exceeding the national average by 0.7 percentage points. The Jilin provincial government aims to make Bank of Jilin a model for high-quality financial development, and Bank of Jilin continues to actively support the province’s economic and social growth.

ED: What was the situation of Bank of Jilin when you first joined? What actions did you take to strengthen the bank?

QJZ: Bank of Jilin, like many city-commercial banks, had experienced rapid growth that left it facing high-risk challenges. When I joined in early 2020, the bank was classified as a high-risk financial institution. Over the past four years, with support from the Jilin provincial government and regulatory bodies, and under the leadership of two chairmen, Chen Yulong and Wang Lisheng, and the current leadership team, Bank of Jilin has undertaken comprehensive reform and transformation. This transformation has focused on reducing risks, transforming its business operations and overhauling management structures.

ED: What initiatives have you introduced at Bank of Jilin, particularly in retail, private, transaction and corporate banking?

QJZ: Retail banking transformation: Bank of Jilin has focused on retail transformation as a critical part of its reform efforts, implementing 10 new approaches to reshape retail operations. This shift has benefited the bank’s retail business and spurred the entire institution’s reform while contributing to Jilin’s economic and social development.

Private banking: Bank of Jilin’s private banking began from a low base, initially meeting both internal and external scepticism. Since 2021, inspired by successful models at other banks, we have built and gradually improved our private banking business, aiming to create a private banking service that feels personal and trusted.

Transaction banking: We established a transaction banking department within the head office, consolidating this function under our corporate banking framework. The department has focused on developing digital finance solutions, including smart supply chains, smart treasury services and digital settlement services.

Corporate banking transformation: Corporate banking remains Bank of Jilin’s primary business area, with deposits and loans comprising 30% and 75% of the bank’s balance sheet, respectively. Facing challenges in traditional business models, Bank of Jilin initiated a transformation of corporate banking, rebuilding business philosophy, organisational structures, management mechanisms and operational processes.

ED: What is your long-term vision for Bank of Jilin?

QJZ: Our long-term vision is to transform Bank of Jilin into a top-tier city commercial bank nationwide. Regulatory authorities and the Jilin provincial government aim for Bank of Jilin to be a success story: a high-risk bank that underwent a successful transformation. This is especially significant given that Jilin is an underdeveloped region and the bank was able to recover without government rescue.

ED: What type of infrastructure and talent investments will Bank of Jilin need to achieve its long-term goals? How long do you anticipate these objectives will take?

QJZ: We focus on both online and offline infrastructure development.

Online: We are accelerating our digital transformation to become the best omni-channel (OMO) city commercial bank. Since launching our digital transformation in 2020, we have bridged many gaps and will continue to implement our financial technology plans for version 2.0.

Offline: We aim to upgrade our offline channels, building on the 362 existing branches that span nine cities and 34 counties in the province. This year, we established over 1,582 community and rural service stations to provide more accessible banking services across the province.

Talent is our most critical resource, and in recent years, Bank of Jilin has made extensive efforts to build our talent pool. We have recruited more than 6,700 employees, including nearly 100 high-level market-based hires.

Talent development: Bank of Jilin prioritises cultivating high-quality, professional talent to support the bank’s transformation and growth goals. We have implemented a flexible "Six Abilities" mechanism, enabling promotions and demotions for leadership, open entry and exit for employees and a performance-based salary structure. For future growth, we plan to deepen our investment in talent development, focusing on building a "learning organisation" that supports continuous growth.

Our approach will continue to employ a talent production line, designed to encourage skill development through structured learning pathways, milestone-based progression, mentorship and training. We are committed to developing a well-rounded workforce, prepared for the demands of high-quality banking in a modern, competitive environment. This commitment aligns with our aim to fulfil the "Five Ones" goal by 2028, which includes achieving RMB 1 trillion ($140 billion) in assets, assets under management (AUM) and financial product aggregate (FPA), as well as securing RMB 10 billion ($1.4 billion) in profits and obtaining a listing permit.

Bank of Jilin is positioning itself for long-term success through strategic investments in technology, infrastructure and people, paving the way to become a top-tier city commercial bank, known for its strong risk management, digital innovation and unwavering commitment to customer service.



Keywords: Small Businesses, Corporate Lending, Jilin Province, Economic Revival, Non-performing Loans, Financial Stability, Infrastructure Development, Talent Investment, Government Support, City Commercial Bank, Financial Technology, Omni-channel Banking, Rural Service Stations, Economic Growth, Jilin Economy
Institution: Bank Of Jilin
Country: China
Region: Asia Pacific
People: Qin Jizhang, Chen Yulong, Wang Lisheng
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