Honest, not evading problems, and being pragmatic, this is the impression that Ji Guangheng left to the outside world.
In mid-March, he made his debut as president of Ping An Bank (000001.SZ) with a new senior management team at the company's 2023 annual results conference. In the more than one-hour Q&A session, he confronted market concerns such as structural reform, pressure on net interest margin, retail transformation, and real estate risk resolution.
After the press conference, Ji Guangheng accepted a closed-door interview with Times Weekly and other media for more than an hour. "Strategic reform is not to change the leader and have to overturn and start again, but to face up to and solve the problems accumulated in the past high-speed development stage, so as to make itself more distinctive and competitive. He confessed.
Since taking over Ping An Bank in June 2023, Ji Guangheng has led this star bank to start a strategic reform, with high-level personnel changes, promoting organizational structure adjustment, canceling the industry business unit system that has been implemented for many years, and implementing the independent operation of branches; At the same time, it took the initiative to slow down the pace of expansion, promote the adjustment of business structure, reduce high-risk retail business, and seek a new balance between risk and return.
According to the financial report, in 2023, Ping An Bank will achieve operating income of 164.699 billion yuan, a year-on-year decrease of 8.4%; the net profit was 46.455 billion yuan, a year-on-year increase of 2.1%; This result was in line with market expectations, and the dividend ratio exceeded expectations, increasing from 12% to 30%. "It is a natural and unshirkable duty to distribute the money to investors. Ji Guangheng said at the press conference.
In the current complex internal and external environment, the banking industry is generally facing multiple pressures such as narrowing interest rate spreads, slowing income growth, and asset quality pressure. After years of rapid development, Ping An Bank's performance has begun to slow down, and some problems have gradually emerged, and its organizational structure and business development model need to be iteratively upgraded.
"This structural reform enables Ping An Bank to better adapt to the development needs of the new situation and new stage, and better promote the high-quality development of the bank. Ji Guangheng told the Times Weekly reporter that under the complex situation of the entire economic situation, the operation of the bank is in a hurry, to endure loneliness, calm down, structural reform is a very important part, and the effect ultimately depends on the performance and market reaction after 2~3 years.
In the face of pressure on the retail business, Ping An Bank did not engage in shock therapy, but chose to gradually iterate in the transformation to maintain a relatively stable asset scale. He stressed that Ping An Bank should change its business awareness, adhere to a prudent risk appetite, not overdo the pursuit of short-term profits, expand medium and low-risk products, build a solid foundation for asset quality, and properly resolve retail stock risks.
"In a cold and windy time, whoever is prepared has a better chance of winning in the future. "Ji Guangheng has a strong sense of crisis. More often than not, he said, it is necessary to enhance the sense of crisis and urgency.
Ji Guangheng is humble, he believes that on the stage of Ping An Bank, it is necessary to reassure the regulators, the shareholders, the employees are relatively happy, and the market is at ease, and hopes that when he leaves in the future, he can hand over a relatively healthy bank to the next one.
Ji Guangheng, Secretary of the Party Committee and President of Ping An Bank. Source: Ping An Bank
Structural adjustment: bid farewell to the business department and strengthen the branch
At half past two o'clock in the afternoon of March 15, Ji Guangheng walked into the conference room of the South Tower of Ping An Financial Center on time, wearing a dark blue suit and rimless gold wire glasses, with a light gait and an elegant temperament. After more than 2 hours of performance meeting in the morning, he wrote an internal email between lunches and rushed to the conference room to be interviewed by Times Weekly and other media. He stressed that we must be honest, professional and thorough in dealing with the market.
The busy pace of work is the norm for Ji Guangheng to be at the helm of Ping An Bank for 9 months. In June 2023, Ji Guangheng, then Deputy General Manager of Ping An and General Manager of the Group's Shanghai Management Headquarters, was transferred from Shanghai to Shenzhen to serve as Secretary of the Party Committee and President of Ping An Bank, and his qualifications for the position of President were approved by the regulator in November of the same year.
Ji Guangheng, 56, graduated from Peking University with a bachelor's degree in economic geography, a master's degree in human geography and a doctorate in regional economics. Since taking office, Ji Guangheng has conducted intensive research, communicated with the presidents of major branches of Ping An Bank, looked for problems, listened to suggestions, and studied methods.
"I had an hour-long face-to-face conversation with all the top leaders, and my opinions were highly consistent with the members of the head office team, and I also reached a consensus with the consulting company McKinsey. Ji Guangheng said.
At present, the restructuring of Ping An Bank has been basically implemented at the head office level, and the head office departments have been streamlined from the original 43 to 32, and the structural adjustment at the branch level is still in progress.
In terms of corporate finance, Ping An Bank abolished the industry division system and merged the original six industry divisions into the strategic customer department. In the retail finance sector, the sales promotion departments of the retail area in three regions were abolished, and the integrated financial service center was integrated into the integrated financial development department.
In this structural reform, the head office of Ping An Bank streamlined its structure, streamlined administration and delegated powers, straightened out the relationship between lines and branches, and shifted its business model from line-based to branch-based.
Since 2013, Ping An Bank has formally implemented the business unit system, and since then it has made several adjustments to form a line-based business model, which has played a key role in the retail transformation, but it is no longer suitable for the current new situation.
Ji Guangheng pointed out that in the past, Ping An Bank's line strength was very strong, and the branch president did not care about retail business, assessment, and resource allocation, and retail formed a "bank within a bank", which is not conducive to the long-term healthy development of the bank; For volatile and cyclical industries, it is difficult to achieve self-revolution if the division system is made.
According to Ji Guangheng's plan, the head office will be transformed into a service-oriented and enabling organization to provide backup guarantee and management support for the branches; The branch has been transformed into a business entity, and has become the main battlefield for territorial relations and the concentration of customer business resources.
This structural reform straightens out the relationship between Ping An Bank's lines and branches, and strengthens its branches is an important direction.
"At present, the geographical differentiation of the economy is becoming more and more obvious, and the homogeneous competition between banks is becoming more and more cruel, so it is necessary to give more decision-making power to the 'commanders' who are closer to the front line. Ji Guangheng told a reporter from the Times Weekly.
In this structural adjustment, Ping An Bank broke the barriers between lines, changed the previous silo management model, and changed its business model from line-based to branch-based.
Ji Guangheng stressed that it is necessary to improve the comprehensive ability of the branch, and the president of the branch will be in charge of all business, release the vitality of the branch, give full play to its initiative, take the main responsibility for the operation and business results of the region, and at the same time have greater decision-making power over the personnel allocation, resource allocation and credit policy within the jurisdiction. In the future, the branch will also implement the "hierarchical bank" system, and the next step will be to carry out differentiated resource endowment allocation according to different levels and different regions.
Ji Guangheng believes that this structural reform is not only the optimization and efficiency improvement of the original organizational structure, but also a sublimation of corporate culture and values. It is hoped that through the reform, a more flexible, efficient and adaptable mechanism will be established to stimulate the innovation vitality of the team and enhance the overall competitiveness of the bank. At present, the reform has begun to show results, but it still needs a process to go from resembling to resembling. Subsequently, the bank will continue to review, correct and correct deviations according to market changes and implementation.
Executives: Cadres must understand business and be able to solve complex problems
At the same time as the structural reform was implemented, Ping An Bank also completed the high-level change. This performance conference is the first appearance of Ji Guangheng and the new senior management team of Ping An Bank.
Ping An Bank's round of high-level changes is mainly based on internal promotion. Yang Zhiqun, Vice President and President of Shenzhen Branch, and Zhang Zhaohui, Assistant to the President and President of Shanghai Branch, returned to the head office, and the two took over the corporate business and retail business respectively, and no longer served as branch presidents. Wu Leiming, President of Xi'an Branch, was appointed as Assistant to the President and Chief Risk Officer of Ping An Bank, pending regulatory approval; Together with Xiang Youzhi, vice president and chief financial officer of the bank, and Zhou Qiang, secretary of the board of directors who is familiar with the capital market, Ping An Bank has built a new senior management team.
New management of Ping An Bank. Source: Ping An Bank
Ji Guangheng said that the head office leaders who previously served as the branch president are no longer concurrent, in the future, theoretically speaking, the head office leaders must have the experience of the branch president, and the department boss should theoretically be the branch president, to be familiar with the bank's core business, including credit, accounting, capital and other businesses, and have the ability to solve complex problems and break through the predicament, to be able to lead the team, but also to have a bottom line, will settle accounts, and have both ability and political integrity.
At present, the new senior management team of Ping An Bank is younger, highly educated and professional, with Yang Zhiqun, Wu Leiming and Zhou Qiang all "post-70s", and Ji Guangheng, Xiang Youzhi, Yang Zhiqun and Zhou Qiang all have doctorates. Ji Guangheng said that there have been great changes in the professionalism and complementarity of the entire team.
Ji Guangheng attaches great importance to the team's experience in public, and he asked the management to answer questions at the performance meeting. He told the Times reporter that many branch presidents will "fight", but their ability to express themselves in public needs to be strengthened, so it is also a challenge to encourage them to speak, and to answer sharp questions in the face of such a big scene, it is also a challenge to speak out in an orderly and measured manner.
"I don't pay too much attention to performance, I will pay attention to the team, as long as the team comes out, performance is a by-product, and there will be performance. The key is the team, and the team relies on the mechanism, the mechanism is transparent and clean, and what remains after elimination is capable cadres. Ji Guangheng emphasized that don't rush for quick success and quick profit, and don't judge things too early.
Ji Guangheng said that it is necessary to optimize the selection mechanism, cadres can go up and down, and employ people from all over the world, and the process should be fair, just and open, encourage cross-employment, form a puzzle of ability, focus on discovering and selecting young talents, and promote the recruitment of fresh graduates.
"Internally, it's not about everything, it's more about how to make the best use of the team's strengths. Ji Guangheng usually holds internal meetings and often encourages everyone to raise more different opinions. In his view, this is a correction for individuals, and sometimes it is also a correction for the general direction of the bank.
Ji Guangheng claimed to be a "person who cherishes feathers", and after arriving at Ping An Bank, he advocated internally that everyone should complement each other, empathize with each other, and plant more flowers and less thorns. "This does not mean that management should be relaxed, or that we should be strict, I can tolerate 1-2 empirical mistakes, but I cannot tolerate ethical mistakes. He said.
Business transformation: Retail actively adjusts to the top of the public
The structural changes are all aimed at better promoting business transformation.
Since Ping An Bank launched its retail transformation in 2016, the retail business has become a strong growth pole for the bank's performance, and it has been called the "new king of retail" in the industry. After several years of rapid development, some problems accumulated in the bank's retail business began to appear, and its performance declined.
Ji Guangheng pointed out that the bank's previous high interest rate spread was not based on low-cost debt, but from the high interest rate on the asset side. In the past, in the pro-cyclical economy, Ping An Bank did a lot of "three high" (high interest rate, high spread, high risk) products and businesses, when the economy is down, "it must be the product with high interest rate that goes wrong first", and it has been unable to maintain high profits, so it has had a great impact on the retail business and brought certain pressure.
Ji Guangheng said frankly that this kind of business undoubtedly brings high revenue, but it does not necessarily have high profits, because its risk erosion is very large, and in the process of converting revenue into profits, Ping An Bank's risk loss is relatively high.
"This is determined by Ping An Bank's customer structure, product structure and profit model, and we recognize it. Ji Guangheng said that when the uncertainty of economic growth is high, it is difficult to make up the price, so in the second half of 2023, it will adjust the retail business in a very timely and decisive manner, and the bank took the initiative to reduce more than 100 billion yuan of high-risk retail credit in the second half of last year.
In fact, Ji Guangheng proposed at the beginning of his tenure that he should reduce blind expansion and be more calm in the pursuit of scale. In Ping An Bank's 2023 annual report, he first mentioned that the retail business "focuses on a stable business model" and increased its real estate mortgage and other businesses, with the bank's housing mortgage and operating loans increasing by 6.7% and 5.6% respectively in 2023 compared with the beginning of the year.
"At present, Ping An Bank's retail NPL generation rate has gradually stabilized, but the overall pressure is still large. Ji Guangheng said that high-risk stock assets are still there, and there is still some uncertainty in the economy, and the risk will be cleared as soon as possible and return to growth.
"Retail business is the hallmark of Ping An Bank, and we will consistently adhere to the core position of retail business strategy. Due to the active transformation, the retail business is facing some challenges in the short term, and it is hoped that the corporate business can rise to the top to buy time for the retail transformation. At the same time, we will more resolutely strengthen refined management and cost control. Ji Guangheng said.
As he said, Ping An Bank's corporate business has gradually "come up". According to the data, the net profit of the bank's wholesale financial business increased from 15.659 billion yuan in 2022 to 29.558 billion yuan in 2023, accounting for 63.6% from 34.4%. In the future, the bank will continue to deepen its strategy of refinement in the public sector.
However, Ping An Bank, as the "new king of retail", is quite concerned about when the inflection point of its retail business transformation will come. In Ji Guangheng's view, there are two definitions of this inflection point, one is the return to the positive of the net investment scale; The second is a significant improvement in asset quality.
At this stage, as Ping An Bank took the initiative to adjust, lower interest rates and raise the threshold, the scale of retail credit is still declining, and the investment is also relatively cautious.
Ji Guangheng said that Ping An Bank will not engage in "shock therapy" to avoid the rapid loss of asset customers, but will gradually iterate in the transformation process to maintain the relative stability of asset scale; At present, the bank's operation is shifting to medium and low-risk customer groups, and the market competition is very fierce, and it still takes a process to form a scale; While asset quality has improved, the inflection point of the retail business is also largely dependent on socio-economic performance.
On the other hand, the recent debt repayment turmoil of Vanke Real Estate has attracted the attention of all parties, and Ping An Bank said at the performance meeting that the bank and Vanke have long-term cooperation, and the overall risk is controllable. "We also think Vanke is a good company, and I think there is no doubt about that, and there are internal evaluations. Ji Guangheng said bluntly.
In his view, the risk resolution of the real estate industry has entered a critical stage at this stage, and the bank must not only deal with the stock risk, but also prevent the generation of new risks.
"Resolving real estate risks is also a process of self-redemption for banks. Ji Guangheng believes that the credit assets of real estate in the banking system are very large, and in the process of risk resolution, we must have the mentality and measures to overcome the difficulties together; Supporting the healthy development of real estate is also supporting banks to build a healthy balance sheet now and in the future.