Produced by | Bullet Finance
Author | Lili
Edit | Egg total
American Editor | Qianqian
Audit | Ode
A few days ago, Zhongyuan Bank released its 2023 annual performance report, which is also its first complete fiscal year performance "report card" after the merger and reorganization.
Zhongyuan Bank is a provincial corporate bank in Henan, and in the ten years since its establishment in 2014, the bank has experienced two major leaps.
In July 2017, Zhongyuan Bank was listed on the main board of the Hong Kong Stock Exchange, and in May 2022, with the approval of the former China Banking and Insurance Regulatory Commission, Zhongyuan Bank officially absorbed and merged Luoyang Bank, Pingdingshan Bank and Jiaozuo China Travel Bank.
After this merger, Zhongyuan Bank has become a new provincial-level city commercial bank with a trillion yuan in one fell swoop, ranking eighth among urban commercial banks in China. The merger and reorganization has a short time and low cost, and has been praised by the industry as a "sample of urban commercial bank reform and risk reduction".
However, if you want to wear a crown, you must bear its weight. While Zhongyuan Bank's assets are expanding rapidly, the "sequelae" are also gradually emerging.
According to the annual report, Zhongyuan Bank's net profit attributable to the parent company fell to 3.221 billion yuan (RMB, the same below), a year-on-year decrease of 11.8%. In terms of asset quality, the amount of non-performing loans of Zhongyuan Bank was RMB14.452 billion, an increase of RMB1.253 billion from the end of the previous year, and the non-performing loan ratio was 2.04%, an increase of 0.11 percentage points from the end of the previous year.
What's more serious is that in recent years, Zhongyuan Bank's internal control problems have been continuously exposed, and since 2022, a number of senior executives, including the two chairmen, have been "dismissed".
In 2023, Zhongyuan Bank will usher in a new general, and how the bank will improve its performance and strengthen internal risk control while maintaining its scale advantage in the future will become a major attraction after the new leadership team takes office.
1. Assets and revenues both increased, and asset impairment losses dragged down net profit
The annual report shows that in 2023, Zhongyuan Bank's assets and revenue will achieve double growth, but its net profit will decline.
(Photo / Zhongyuan Bank 2023 Annual Report)
In 2023, Zhongyuan Bank's total assets will be 1.35 trillion yuan, an increase of 1.5%. Total loans and advances amounted to MOP711.68 billion, up by 3.5%. The total liabilities were 1,249.558 billion yuan, up by 1.3 percent, and the total deposits absorbed were 859.784 billion yuan, up by 1.7 percent.
From the revenue side, by the end of 2023, Zhongyuan Bank achieved operating income of 26.183 billion yuan, a year-on-year increase of 2.2%.
In terms of net interest income, as of the end of December 2023, Zhongyuan Bank achieved 22.263 billion yuan, an increase of 987 million yuan or 4.6% year-on-year, of which the net interest income increased by 5.358 billion yuan compared with the previous year due to the expansion of business scale, and the net interest income decreased by 4.371 billion yuan due to changes in yield or interest payment rate.
In terms of non-interest income, due to the decrease in fee income from wealth management business, the bank achieved net fee and commission income of RMB1.319 billion, a year-on-year decrease of RMB465 million, or 26.1%.
In terms of net profit, Zhongyuan Bank achieved a net profit of 3.206 billion yuan in 2023, a year-on-year decrease of 16.2%, and a net profit attributable to the parent company of 3.221 billion yuan, a year-on-year decrease of 11.8%.
In fact, since the merger, Zhongyuan Bank's revenue has increased, but its business is still in a transition period of integration, which has increased costs and expenses, which in turn have eroded net profits, and asset impairment losses have risen sharply. (Editor's note: Asset impairment loss refers to the corresponding loss recognized by the enterprise after testing the asset and judging that the recoverable amount of the asset is lower than its book value. ）
According to the annual report, the asset impairment loss of Zhongyuan Bank in 2023 will be 12.56 billion yuan, an increase of 1.37 billion yuan or 12.2% year-on-year. In 2022, Zhongyuan Bank's asset impairment loss will be 11.19 billion yuan, a year-on-year increase of 46.5% from 7.64 billion yuan in the previous year.
(Photo / Zhongyuan Bank 2023 Annual Report)
In terms of the composition of asset impairment losses, in 2023, the bank issued loans and advances of 3.555 billion yuan, a year-on-year decrease of 51.2%, investment securities and other financial assets of 6.142 billion yuan, a year-on-year increase of 158.95%, and other assets of 2.077 billion yuan, an increase of 142.7% year-on-year.
In this regard, Zhongyuan Bank said that it was mainly due to the continuous increase in provisions and effectively improving the ability to offset risks.
2. Non-performing loans "double rise"
After Zhongyuan Bank absorbed and merged Luoyang Bank, Pingdingshan Bank and Jiaozuo China Travel Bank, it also encountered some problems and obstacles while expanding its asset scale, and the disposal of non-performing assets was one of them.
In the process of absorption and merger, Zhongyuan Bank was associated with a large number of non-performing loans. Although some of the non-performing assets had been divested at the beginning of the merger and were taken over by the local AMC, the annual report showed that Zhongyuan Bank's non-performing loans were still under pressure.
In 2023, Zhongyuan Bank's non-performing loan ratio and non-performing loan amount will both rise.
According to the annual report, as of the end of 2023, the bank's non-performing loans amounted to RMB14.452 billion, an increase of RMB1.253 billion from the end of the previous year, the non-performing loan ratio was 2.04%, an increase of 0.11 percentage points from the end of the previous year, and the provision coverage ratio was 154.06%, a decrease of 3.02 percentage points from the end of the previous year.
(Photo / Zhongyuan Bank 2023 Annual Report)
As of the end of the Reporting Period, the amount of personal non-performing loans of Zhongyuan Bank was approximately RMB7.393 billion, an increase of approximately RMB1.119 billion from the end of the previous year, and the non-performing loan ratio increased by approximately 0.21 percentage points from the end of the previous year to 2.85%.
In this regard, Zhongyuan Bank said that it was mainly due to the implementation of a more prudent five-level classification standard this year, and the sharp decline in income of some individual customers due to the economic environment, and the weakening of their repayment ability.
The amount of non-performing loans of the corporate category was approximately RMB7.060 billion, an increase of approximately RMB145 million from the end of the previous year, and the non-performing loan ratio decreased by approximately 0.08 percentage points from the end of the previous year to 1.78%.
By industry, the industries with higher non-performing loan ratios were mainly concentrated in agriculture, forestry, animal husbandry and fishery, real estate, and accommodation and catering, with non-performing loan ratios of about 7.42%, 4.56% and 3.74% respectively.
Among them, agriculture, forestry, animal husbandry and fishery credit customers have not been significantly improved due to the impact of the industry cycle, and the non-performing rate has increased. As of the end of 2023, the amount of non-performing loans increased by approximately RMB50 million from the end of the previous year, and the non-performing loan ratio increased by approximately 0.31 percentage points.
The non-performing loan ratio of the real estate industry was lowered from the previous year, and the amount of non-performing loans decreased by about 297 million yuan from the end of the previous year, and the non-performing loan ratio decreased by about 1.27 percentage points. Zhongyuan Bank said in its annual report that it was mainly due to the response to the state's support policy for real estate enterprises this year, which alleviated the pressure of customers to concentrate on repayment, and the risk exposure was slowed down.
In addition, after the completion of the merger of the three banks, the pressure on capital replenishment of Zhongyuan Bank has further increased, and its three adequacy ratio indicators have collectively declined in the first year of the merger.
According to the 2023 annual report, among the three adequacy ratios of Zhongyuan Bank, the core Tier 1 capital adequacy ratio, Tier 1 capital adequacy ratio, and capital adequacy ratio are 8.10%, 10.44%, and 11.64%, respectively. Its capital adequacy ratio decreased by 0.19 percentage points from the previous year, while the other two items increased.
(Photo / Zhongyuan Bank 2023 Annual Report)
The bank said that during the reporting period, the core Tier 1 capital adequacy ratio increased slightly compared with the beginning of the year due to the maturity redemption of Tier 2 capital instruments and preferred shares, which led to a decrease in the capital adequacy ratio compared with the beginning of the year.
In order to improve the capital adequacy ratio, Zhongyuan Bank issued capital bonds several times in 2023.
According to incomplete statistics from "Jiemian News Bullet Finance", in August 2023, Zhongyuan Bank announced that it would successfully issue the first phase of Zhongyuan Bank's 2023 non-fixed-term capital bonds in the national interbank bond market, with an issuance scale of 10 billion yuan.
In October of the same year, at the second extraordinary general meeting of shareholders, Zhongyuan Bank deliberated and approved the proposal to issue secondary capital bonds, and planned to issue no more than 12 billion yuan of qualified secondary capital bonds.
3. How to break through by changing the chairman three times in two years?
"Jiemian News Bullet Finance" noticed that in addition to the decline in net profit and the increase in the non-performing rate, Zhongyuan Bank's internal control problems have occurred frequently in recent years.
Since 2022, Dou Rongxing, the first chairman of Zhongyuan Bank, Xu Nuojin, the second chairman, and a number of senior executives have been "dismissed".
According to public information, since the establishment of Zhongyuan Bank in December 2014, Dou Rongxing has been serving as the secretary of the Party Committee and chairman of Zhongyuan Bank. In August 2021, Zhongyuan Bank announced Dou Rongxing's resignation due to work adjustments. In November 2021, Dou Rongxing was disqualified as a member of the National Committee of the Chinese People's Political Consultative Conference.
In June 2022, the website of the Central Commission for Discipline Inspection and the State Supervision Commission released news that Dou Rongxing was "double-opened". The facts of the crime include engaging in profit-making activities in violation of regulations, abusing one's authority to seek profits for the business activities of relatives and friends, using one's authority to pay for expenses that should be paid by one's own person and engaging in money transactions, engaging in large-scale power-for-money transactions and illegally accepting huge amounts of property, and issuing loans in violation of regulations, the amount of which is particularly huge, and so on.
Dou Rongxing's fate seems to be playing out again in his successor Xu Nuojin.
When Xu Nuojin took the helm of Zhongyuan Bank, Dou Rongxing resigned. Prior to joining Zhongyuan Bank, Xu Nuojin worked in the People's Bank of China system. In September 2021, the board of directors of Zhongyuan Bank recommended the appointment of Xu Nuojin as the executive director of the second board of directors. In November of the same year, Xu Nuojin's qualifications as chairman were approved by the Henan Banking and Insurance Regulatory Bureau.
In April 2023, Xu Nuojin resigned from the bank's chairman, party secretary and other positions. Subsequently, he was transferred to the vice chairman of the Financial and Economic Committee of the Henan Provincial People's Congress.
In February 2024, the official website of the Central Commission for Discipline Inspection disclosed that Xu Nuojin was suspected of serious violations of discipline and law, and is currently undergoing disciplinary review and supervision investigation by the Henan Provincial Commission for Discipline Inspection and Supervision.
And this is less than one year after Xu Nuojin stepped down as chairman of Zhongyuan Bank.
In addition, according to the statistics of "Jiemian News Bullet Finance", since 2022, many executives of Zhongyuan Bank have been "dismissed" one after another. In addition to the above-mentioned Dou Rongxing and Xu Nuojin, the former vice president Zhao Weihua was "double-opened" in April 2022, the former vice chairman Wei Jie was investigated in June 2022, and the deputy chairman of the board of supervisors Jia Jihong was investigated in February 2023.
(Photo / Photo Network, based on VRF protocol)
At present, how to eliminate the "sequelae" brought about by the merger and reorganization and further boost the performance is a test for the successor.
In 2023, Zhongyuan Bank will usher in a new combination of "post-70s" chairman + president.
In April 2023, Zhongyuan Bank organized a cadre meeting to announce the decision of the Provincial Party Committee, and Guo Hao was appointed Secretary of the Party Committee of Zhongyuan Bank. On November 28, the bank announced that the board of directors elected Guo Hao as the chairman of the third board of directors of Zhongyuan Bank and appointed Liu Kai as the president of Zhongyuan Bank.
According to public information, Guo Hao was born in 1974 and has been in politics for more than ten years. He served as the Director of the Second Finance Office of the Beijing Municipal Development and Reform Commission, the Deputy Director of the Henan Rural Credit Cooperatives, the Deputy Secretary-General of the Henan Provincial People's Government, and the Mayor of the Hebi Municipal People's Government of Henan Province.
Born in 1971, Liu Kai came from the central bank system and served as the director of the office of the Zhengzhou Central Branch of the People's Bank of China, the secretary of the Party Committee and the president of the Anyang Central Branch of the People's Bank of China, and the assistant director of the Financial Market Department of the People's Bank of China.
In 2014, Liu Kai joined Zhongyuan Bank and successively served as a member of the Party Committee, Vice President, Deputy Secretary of the Party Committee, Acting President, Deputy Secretary of the Party Committee and President.
According to the annual report, only one of the bank's 14 senior managers is a "post-60s", Zhou Litao, vice president of the bank, Pan Wenyao, secretary of the board of directors, Tong Qi, general manager of the financial and accounting department, Huang Ming, general manager of the audit department, and a number of assistant presidents, all of whom are "post-70s"; Wang Tianqi, assistant to the president, and Hu Hao, chief information officer, are "post-80s".
On the whole, after the high-level adjustment, Zhongyuan Bank has formed a leadership team dominated by the "post-70s".
Whether this young and professional senior management team can lead Zhongyuan Bank to improve its asset quality and net profit under pressure remains to be answered by the market and time.
*The title image in the article comes from: Camera.com, based on VRF protocol.