On the evening of March 14, Ping An Bank disclosed in its annual report that its operating income and net profit last year fell by over 10% and 4% respectively compared to the previous year. This commercial bank controlled by the Chinese government asset management agency saw a decline in operating income for the first time in over a decade.
According to a report by “Yicai,” Ping An Bank’s annual report data for the full year of 2024 showed that the bank achieved operating income of 146.69 billion yuan, a decrease of 10.9% year-on-year, and a net profit of 44.508 billion yuan, a decrease of 4.2% year-on-year.
In the past two years, with the slowing growth of effective loan demand and continued decline in the interest margin, there have been individual banks experiencing a decline in revenue and net profit in 2022. Out of nearly 20 A-share banks that have disclosed their full-year performance for the previous year, a few also experienced a year-on-year decrease in operating income or net profit.
Similar to its industry peers, Ping An Bank also experienced declines in operating income in 2023 and 2024, with decreases of 8.4% and 13% respectively. However, unlike previous years, although operating income declined, net profit for the whole year still increased by 2.1% and 1.9% year-on-year. A simultaneous decline in operating income and net profit throughout the year is a first for the bank since its consolidation.
The negative growth in operating income and net profit at Ping An Bank is attributed to factors such as declining interest margin, insufficient demand for effective loans, and proactive adjustment of asset structure.
Ping An Bank anticipates downward pressure on net interest margin in 2025.
As of the end of 2024, the bank’s personal loans decreased by over 200 billion yuan, representing a 10.6% drop compared to the previous year. Retail business revenue decreased by around 24.9 billion yuan year-on-year, with a decrease of nearly 35%; the total profit and net profit were only around 60 million yuan, witnessing a significant decrease of about 95% compared to the previous year.
In July 2024, news spread about Ping An Bank’s decision to relocate its entire Shanghai office region plan back to Shenzhen, with some sources indicating this move as a disguised layoff. In May last year, there were reports of “employee performance-related pay cuts” at Ping An Bank.
Dong Ximiao, chief researcher at Zhongzheng Securities, previously analyzed to the “Beijing Business Daily” that in recent years, the net profit growth rate of the banking industry has been declining year by year. In this scenario, the compensation of bank employees is inevitably affected. Time-wise, this impact is expected to last for a while.