#5月财经新势力 #
【Uncle Ye Observation】
On May 31, 2023, CCB issued the "Announcement on the Approval of CCB Consumer Finance Co., Ltd." issued by the listed institution, according to which the "CCB Consumer Finance Company" initiated by the bank, together with Beijing State-owned Assets Operation Co., Ltd. and Wangfujing Group Co., Ltd., has been approved by the regulatory authorities and will open and operate as soon as possible, operating personal consumption loans, agency sales of insurance products related to consumer loans, and other businesses.
With a shareholder background and a registered capital of RMB7.2 billion, CCB Consumer Finance has become a "giant" in the industry from birth and a strong competitor to the retail business of other consumer finance companies and commercial banks. From a long-term perspective, what is the development of CCB's personal consumption loan business and the personal consumption loan market of financial institutions as a whole (2000-2022)? What kind of development strategies will the Rural Commercial Bank adopt in the later stage to cope with the new changes in the market?
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Personal consumption loans: the case of CCB
First, the development trend of personal loans of CCB. At the end of 2006, CCB's personal loan balance was 585.09 billion yuan. Since 2007, the growth rate of the bank's personal loans has been significantly faster than the average growth rate of all loans. Especially from 2009 to 2019, although the growth rate of personal loans showed a downward trend, it has maintained a gap of at least 1.92 percentage points higher than the average growth rate of loans in the same period, and the largest difference is 13.01 percentage points in 2016. In 2016, CCB's various loans increased by 12.13% year-on-year, of which personal loans increased by 25.14% year-on-year (see Figure 2 attached to this article for details).
Since 2021, the growth rate of CCB's personal loans has slowed down significantly. At the end of 2022, its personal loan balance reached 8,236.77 billion yuan, a year-on-year increase of only 4.37%, the lowest growth rate since 2006. However, the proportion of personal loans of the bank has increased from 20.36% at the end of 2006 to 38.85% at the end of 2022, which shows that the status of personal retail business has become more and more important.
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Second, CCB's personal consumption loans increased. At the end of 2006, CCB's personal consumption loans (including credit card balances, the same below) amounted to RMB77.476 billion, accounting for 13.24% of personal loans. The balance of personal housing loans was 428.039 billion yuan, accounting for 73.16%. From 2009 to 2019, the growth rate of personal housing loans of the bank has been higher than the growth rate of consumer loans in the same period, becoming the main driving force for the overall growth of personal loans. The former varied from 41.35% to 11.60%, while the latter ranged from 26.61% to 6.85%.
From 2020 to 2022, the growth rate of personal housing loans of the bank declined significantly, with year-on-year growth of 9.91%, 9.53% and 1.46% respectively; However, the growth of consumer loans in the past three years has been relatively stable, with year-on-year growth of 12.09%, 11.66% and 12.89% respectively, becoming an important force to stabilize the overall growth of personal loans (see Figure 3 attached to this article for details).
It is also worth mentioning that from 2013 to 2018, the growth performance of CCB's personal operating loans was almost "dispensable", because of the negative year-on-year growth for six consecutive years. Since 2019, the bank has accelerated the sinking of inclusive markets and promoted online personal "business fast loans" and other products, with a year-on-year growth of at least 37% for four consecutive years. At the end of 2022, the balance of its personal operating loans was 415.34 billion yuan, accounting for 5.04% of personal loans, compared with only 0.56% at the end of 2018.
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Personal consumption loans: a long-term trend
First, the overall development of personal loans. In 2000, the balance of personal loans of financial institutions nationwide was about 846 billion yuan (all of the following are RMB caliber). Since 2001, driven by the rapid growth of personal housing loans, the overall growth of personal loans has been relatively fast; The lowest growth rate in the 20-year period to 2021 was also above 11%, with 11 years of year-on-year growth exceeding 20%. At the end of 2022, the balance of personal loans was 74.93 trillion yuan, a year-on-year increase of 5.4%, which is the only situation below 10% since the beginning of the new century to last year.
In 2023, with the changes in the epidemic and the recovery of the economy, the growth rate of personal loans has rebounded. At the end of March this year, the balance of personal loans was 77.48 trillion yuan, a year-on-year increase of 7.0% (see Figure 4 attached to this article for details).
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Second, the growth trend of personal consumption loans. At the end of 2000, the balance of personal housing loans was about 338 billion yuan, and the balance of general consumer loans after excluding housing loans was about 96 billion yuan. Between 2001 and 2014, the growth rate of consumer loans was more volatile than the growth rate of personal housing loans; After 2017, the downward trend in the growth rate of general consumer loans is as obvious as that of housing loans, but the lowest value of the downward test is higher.
That is, in 2022, the year-on-year growth of personal housing loans will only be 1.3%, and the year-on-year growth of consumer loans will still be 4.1% (see Figure 5 attached to this article for details); The more important force supporting the overall personal loan is personal operating loans, which increased by 16.5% year-on-year. By the end of 2022, the balance of personal housing loans, consumer loans and business loans will be 38.8 trillion yuan, 17.24 trillion yuan and 18.9 trillion yuan, accounting for 57.8%, 23.0% and 25.2% of personal loans, respectively.
In the first quarter of 2023, the balance of personal housing loans was 38.9 trillion yuan, a year-on-year increase of only 0.3%. According to the current trend, the proportion of housing loans in personal loans may be further reduced in the later stage, and the proportion of personal consumption loans may increase. Perhaps it is precisely because of this that CCB will increase its layout in this market and initiate the establishment of consumer finance companies.
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Personal consumption loans: a business approach for agriculture
Among the 30 consumer finance companies that have been established by the end of 2022, several leading institutions have strong competitiveness in terms of integration with consumption scenarios and consumer experience satisfaction by virtue of their brand advantages and technological advantages. At the time of the establishment of CCB Consumer Finance Company, some economic commentators believed that the personal consumer loan market may appear the Matthew effect of the strong Hengqiang.
The strength of consumer finance companies will bring greater competitive pressure to rural commercial banks, which are mainly based on personal loans. Dong Ximiao, chief researcher of Zhongguancun Internet Finance Research Institute, believes that consumer finance should accelerate and deepen digitalization, focusing on increasing services for new citizen groups, developing bulk consumer financial products and strengthening the protection of consumer rights and interests. Uncle Financial Ye believes that his recommendations also apply to rural commercial banks, and more specifically, the following three points need to be considered.
The first is to increase marketing efforts and deepen grid operations. Strengthen online and offline information collection, improve credit coverage for long-tail customers in urban and rural communities, especially focus on the expansion of elderly customers and young customers. Learn to operate new media for marketing and get more customer traffic. Being pre-emptive and preconceived has a brand perception advantage for microfinance customers.
The second is to increase openness and integrate into consumption scenarios. By expanding acquirers, establishing "cross-industry alliances" and various "post stations", it penetrates into the offline retail business scenarios that are still rarely involved in large banks and consumer finance companies, forming a "small but many" consumer finance ecosystem.
The third is to increase investment in science and technology and expand online channels. Accelerate the iteration and promotion of mobile banking, and focus on using "points mall" and other preferential activities to increase the number of "monthly active" customers. Accelerate the upgrade of digital fast loan products and continuously improve customer experience.
In addition, in terms of internal management and organizational mode, rural commercial banks should pay more attention to the strategic position of retail business, strengthen the strategic path of inclusive finance, make efforts in total volume increase, structural optimization, capacity improvement and level management, and build the retail comprehensive account manager team into the "elite teacher" of rural commercial bank.
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Epilogue of Uncle No
Personal loans used to be the traditional dominant market for rural commercial banks, but they are now facing increasingly severe challenges. County rural commercial banks should seize the opportunities of rural revitalization and rural consumption growth, while urban rural commercial banks should seize the opportunity for new citizens to integrate into urban entrepreneurship and consumer demand, innovate business models, enhance competitiveness, and win due market share in personal business loans and personal consumption loans.