Text | Liu Zhentao
Recently, China Everbright Bank has become the focus of market attention, and China Everbright Bank has received a number of fines since 2024, with the amount of fines ranking first among joint-stock banks and exceeding 10 million yuan.
Everbright Bank's 2023 annual report released not long ago also broke the situation of continuous growth in net profit since its A-share listing, and the net profit declined for the first time. In 2023, the annual report revenue and net profit both declined, making it the worst year for performance growth after listing.
Affected by the performance data of the annual report, the stock price of Everbright Bank fell by 7% on the second day of the disclosure of the annual report, and it was close to the limit of the fall during the session.
The sudden plunge in the stock price also made Wang Zhiheng, President of Everbright Bank, respond urgently at the performance briefing on the same day: "Our operating fundamentals are stable, and there are no major risk events that should be disclosed but have not been disclosed, please rest assured, we are full of confidence in the future of Everbright Bank." ”
The fines continued, and the amount of fines exceeded 10 million
On April 17, the administrative penalty information of the Jingzhou Supervision Branch of the State Administration of Financial Supervision and Administration publicly showed that the Jingzhou Branch of Everbright Bank received a fine of 250,000 yuan for issuing unqualified personal loans. Wang Yuping, the account manager of the Jingzhou branch of China Everbright Bank at the time, was responsible for the above reasons and was given a warning.
It is understood that this is not the first fine received by Everbright Bank since 2024. According to wind data and statistics released by the Financial Regulatory Bureau, as of the end of April 18, 2024, Everbright Bank has received 12 fines, involving a penalty amount of 10.66 million yuan.
Comparing China Everbright Bank with the other 11 joint-stock banks, Everbright Bank ranked second among the 12 joint-stock banks in terms of the number of fines and the amount of fines among the 12 joint-stock banks.
It was found that among the 12 fines issued by Everbright Bank in 2024, 9 of them involved credit business violations, including due diligence in pre-loan investigations, issuance of non-compliant loans, and violations in the flow of funds. Among them, on January 4, 2024, Everbright Bank Jilin Branch was fined 4.2 million yuan for failing to perform due diligence in pre-loan investigation and non-compliance in loan fund payment management, which is the largest fine received since 2024.
In the past 2023, according to the Financial Supervision Bureau, a total of 38 fines were issued by Everbright Bank and its branches, with a total fine of 9.055 million yuan.
Now, less than four months after 2024, the amount of the fine imposed by China Everbright Bank has exceeded the amount of the fine for the whole of 2023, which is amazing.
Banks are essentially risky institutions, and if they operate in violation of regulations due to insufficient internal control, they will bring risks to the company's operations. Judging from the violations of fines, "loan business violations" have become the hardest hit area, which undoubtedly shows that CEB needs to put more effort into compliance management in the loan business.
Net interest margin declined, and both revenue and profit growth declined
Compared with the issue of fines and fines, Everbright Bank's financial data in 2023 is more concerning!
According to the 2023 annual report, CEB's total assets reached 6.77 trillion yuan, a year-on-year increase of 7.50%, and its total liabilities reached 6.22 trillion yuan, a year-on-year increase of 7.38%. In terms of total assets and liabilities, CEB has performed relatively well. Looking at revenue and profit, China Everbright Bank is both declining.
According to the data, in 2023, Everbright Bank's revenue will be 145.685 billion yuan, a year-on-year decrease of 3.92%, and the company's net profit will be 40.792 billion yuan, a year-on-year decrease of 8.96%.
Compared with other A-share joint-stock banks that disclosed financial reports, Everbright Bank's revenue and net profit performance was not too bad, with Ping An Bank and Shanghai Pudong Development Bank's revenue falling by more than 8%, and Shanghai Pudong Development Bank's net profit falling by more than 28%.
However, a longitudinal comparison of the situation since the listing of Everbright Bank's A-shares shows that the growth rate of Everbright Bank's revenue and net profit in 2023 is the worst year.
China Everbright Bank was listed on the Shanghai Stock Exchange in 2010, and it has been 14 years since China Everbright Bank was listed on the A-share market. Sorting out the revenue and net profit growth rate of Everbright Bank since its A-share listing 14 years ago, from its listing in 2010 to 2022, Everbright Bank's net profit has increased, while in 2023, Everbright Bank's net profit will decline for the first time, and in the three years from 2021 to 2023, Everbright Bank's net profit growth rate will change from 14.73% to -8.96%.
On the revenue side, in the 14 years of Everbright Bank's A-share listing, there have been three years of revenue decline, of which 2022 and 2023 have declined for two consecutive years, and in the three years from 2021 to 2023, Everbright Bank's revenue growth rate has dropped from 7.14% to -3.92%.
There are two main sources of revenue for banks: interest income and non-interest income, of which interest income is the most important part.
In 2023, the net interest income of Everbright Bank will be 107.480 billion yuan, a decrease of 6.175 billion yuan or 5.43% from 2022, and the non-interest net income will be 38.205 billion yuan, a slight increase of 228 million yuan or about 0.6% year-on-year.
Among them, in terms of non-interest net income, the net fee and commission income of Everbright Bank will be RMB23.698 billion in 2023, a decrease of RMB3.046 billion or 11.39% from 2022. The slight increase in non-interest net income was driven by the growth of other income in 2023.
The slight increase of 0.6% in non-interest net income could not cover the decline in net interest income of 5.43%, and the revenue of Everbright Bank declined.
The decline in CEB's net interest income was due to the narrowing of net interest margin. According to the data, in the past three years from 2021 to 2023, the net interest margin of Everbright Bank is 2.16%, 2.01% and 1.74% respectively. In 2023, the net interest margin decreased by 0.42 percentage points compared to 2021. The "warning line" for net interest margin set by the regulator for commercial banks is 1.8%, and it is clear that China Everbright Bank has fallen below the "warning line".
In recent years, CEB's net interest margin has been declining, and the contribution of scale to interest income has become smaller and smaller, and CEB has not offset the decline in net interest income by accelerating the scale of loans.
According to the data, the total interest-bearing assets of Everbright Bank in 2023 will be 6,165.145 billion yuan, a year-on-year increase of 8.87%, and the average yield will decrease by 0.19 percentage points. Mortgage and advance assets were 3,688.794 billion yuan, a year-on-year increase of 6.2%, and the speed of housing loans did not keep up with the growth rate of interest-bearing assets.
In addition, the loan yield of the banking industry has been declining in recent years, with the average loan yield of Everbright Bank in 2023 being 4.75%, a decrease of 0.23 percentage points from 2022, and the income from "loans and advances" being RMB175.189 billion, an increase of 1.37% over 2022.
In terms of interest payments, in 2023, CEB's total interest-paying liabilities will be RMB5,995.467 billion, up 9.24% year-on-year, and the average cost ratio will increase by 0.06 percentage points year-on-year to 2.39%. The growth rate of interest-paying liabilities is higher than that of interest-bearing assets.
In 2023, the interest income of China Everbright Bank will be RMB250.809 billion, and the interest income in 2022 will be RMB241.309 billion, a year-on-year increase of 3.9%, while the interest expense of CEB in 2023 will be RMB143.329 billion, and the interest expense in 2022 will be RMB127.654 billion, a year-on-year increase of 12.28%. The growth rate of interest expense was significantly higher than that of interest income by 8.38 percentage points, resulting in a decline in net interest income.
As for the reasons for the decline in profits of Everbright Bank, Wang Zhiheng, president of Everbright Bank, said at the performance briefing that the main factor was the increase in credit impairment provisions by 1.677 billion yuan. Especially in the fourth quarter of last year, China Everbright Bank increased its provisions.
According to the data, in 2023, Everbright Bank will make provision for asset impairment losses of about 52.105 billion yuan, and in the first three quarters, Everbright Bank will make provision for credit impairment losses of 35.5 billion yuan, and in the fourth quarter, it will suddenly increase the provision to 16.6 billion yuan. The fourth quarter accounted for 31.85% of the full year.
Generally speaking, the provision for credit impairment will increase the provision coverage ratio, which is conducive to risk management and control, but it will also lead to pressure on bank profits. However, CEB's provision coverage ratio has not improved, but has fallen again.
According to the 2023 annual report, CEB's provision coverage ratio was 181.27%, down 6.66 percentage points from 2022. As of the end of 2023, the average provision coverage ratio of commercial banks was 205.1%. CEB's provision coverage ratio is lower than that of commercial banks as a whole. At the end of 2023, CEB's provision coverage ratio also ranked low compared with other A-share listed joint-stock banks.
At the end of 2022, Wang Zhiheng became the new president of Everbright Bank, and 2023 is the first year of his full tenure, and the first year of the whole year of Everbright Bank has handed over a report card with both revenue and net profit declining. As the new president, there are many pressures and challenges, and there is a long way to go to lead CEB to improve its development.