Three privately-owned banks in China recently disclosed their performance for the first three quarters of 2024, revealing a decline in their net profits. At the same time, various data show that the profit decline of privately-owned banks is more severe compared to state-owned banks and joint-stock banks.
Among the 19 privately-owned banks in China, only Webank, Jilin Yilink Bank, and Wenzhou Minshang Bank have released their performance for the first three quarters of 2024.
As of the end of September 2024, Webank had total assets of 488.85 billion yuan, with operating income of 15.287 billion yuan in the first three quarters, a year-on-year increase of 14.3%. However, its net profit was 2.26 billion yuan, a decrease of 17.43% year-on-year, mainly due to a significant increase in asset impairment losses in the first three quarters of this year.
Wenzhou Minshang Bank had total assets of 470.54 billion yuan, achieving operating income of 840 million yuan in the first three quarters, a 2.14% increase year-on-year. However, its net profit was 397 million yuan, a decrease of 6.67% year-on-year.
Jilin Yilink Bank had total assets of 542.6 billion yuan, with total loans amounting to 297.5 billion yuan, a decrease of 3.85 billion yuan from the beginning of the year. Its total liabilities were 507.92 billion yuan, an increase of 5.1% since the beginning of the year. The total deposits were 280.1 billion yuan, a decrease of 45.56 billion yuan from the beginning of the year. Both loans and deposits saw declines. The bank achieved operating income of 893 million yuan in the first three quarters, a decrease of 11.77% year-on-year, and a net profit of 140 million yuan, a decrease of 80.43% year-on-year.
The data indicates a downward trend in the net profit growth rate of these three privately-owned banks, either showing increased revenue without increased profits, or declining revenues and profits simultaneously.
Furthermore, in terms of asset quality, the non-performing loan ratios of the two privately-owned banks that disclosed data are rapidly increasing, while the provision coverage ratios are consistently declining. As of the end of the third quarter, Jilin Yilink Bank’s non-performing loan ratio was 1.77%, an increase of 0.16 percentage points compared to the beginning of the year, with the provision coverage ratio decreasing by 11.4 percentage points.
Wenzhou Minshang Bank’s non-performing loan ratio was 0.95%, an increase of 0.06 percentage points compared to the beginning of the year, with a provision coverage ratio of 276.64%, a decrease of 14.29 percentage points since the beginning of the year.
Moreover, based on the major regulatory indicators of the banking and insurance industry released by China’s Banking and Insurance Regulatory Commission for the third quarter of 2024, although the net interest margins of privately-owned banks are still higher than other types of banks, they have been declining significantly on a quarterly basis since the beginning of this year, with a decline far exceeding that of other types of banks. In terms of net profit, the net profit growth rates of privately-owned banks each quarter show a trend of turning from positive to negative, continuously and rapidly decreasing. And in terms of asset quality, the year-on-year growth rates of non-performing loan balances at the end of each quarter are generally higher than other types of banks.
In response to this, “Caijing Magazine” mentioned that the banking industry as a whole is facing a dilemma of declining profits, with privately-owned banks experiencing a seemingly more severe decline. Data released by the China Banking and Insurance Regulatory Commission for the third quarter of 2024 showed that by the end of the third quarter, the non-performing loan balance of privately-owned banks was 24 billion yuan, an increase of 4.1 billion yuan from the beginning of the year; the non-performing loan ratio was 1.79%, an increase of 0.24 percentage points from the beginning of the year; the provision coverage ratio was 224.44%, a decrease of 30 percentage points from the beginning of the year; the net profit was 14.1 billion yuan, a decrease of 1.4 billion yuan year-on-year, with a decline of 9.03%; and the net interest margin was 4.13%, a decrease of 0.26 percentage points from the beginning of the year. Comparing various data, it is evident that this year, the decline in performance of privately-owned banks has exceeded that of state-owned banks, joint-stock banks, city commercial banks, and foreign banks.