Among the large state-owned banks, the Postal Savings Bank (601658.SH) is an existence that is both old and young.
It is said to be ancient because the predecessor of the Postal Savings Bank can be traced back to the postal savings business opened in 1919. In 1930, relying on this kind of savings business, the General Administration of Postal Savings and Remittance Industry was established. After the founding of the People's Republic of China, the agency was taken over by the People's Post in 1949.
From the 1950s to the 1980s, postal savings were suspended for a time and then reinstated. In 2005, the three-year era of postal and banking separation began. In 2006, the then China Banking Regulatory Commission issued a letter approving the establishment of the Postal Savings Bank of China, and in March of the following year, the Postal Savings Bank was officially established.
In 2007, PSBC was born, becoming the youngest state-owned bank.
Under the wave of restructuring and development of the banking industry, the newly established Postal Savings Bank immediately joined it, and completed the restructuring of shares, the introduction of strategic investment, and the listing in Hong Kong and A in 2012, 2015, 2016 and 2019 respectively.
Tianyancha data shows that China Post Group is currently the major shareholder of 62.78% of the Postal Savings Bank, and China Mobile, Chinese Life, China Telecom, etc. are also major shareholders of the company. According to public reports, among the major shareholders of the Postal Savings Bank, there are also star institutions such as the Li Ka-shing Foundation.
Not to mention being the youngest big bank, the number of outlets of the Postal Savings Bank far exceeds that of other peers, and it sinks into the county and rural areas. As of mid-2023, PSBC has a staggering 39,440 outlets, of which 80% are agency outlets, far ahead of other major banks. This number edged down to 39,364 at the end of 2023.
The scale of the outlets is so huge, which is inseparable from the unique agency model of the Postal Savings Bank. At the beginning of its establishment, the Postal Savings Bank established the only "self-operated + agency" business model in the banking industry. In other words, the Postal Savings Bank can set up agency outlets on the basis of post offices and other business places, and where there is a post office, there may be a postal savings bank. Moreover, such an agency model will continue to be firmly bound to the Postal Savings Bank and the postal network in the future.
The most significant advantage of the agency model is that it can quickly form a business network with a wide coverage. In addition, the cost of agency outlets is low and the sinking strength is large. Under the brand effect of the postal service, the Postal Savings Bank can also be blessed.
But there are drawbacks to the agency model. For example, Minsheng Securities pointed out in a research report on February 1, 2024 that because the Postal Savings Bank will pay the group a "savings agency fee" according to the term and scale of the deposit absorbed by the agency outlets, it will also follow the principle of "who handles it and who benefits" for intermediate businesses such as settlement guarantees, and transfer the collection of agency outlets to postal enterprises, which will lead to higher actual rates.
In addition to the fact that this business model is different from other banks, there are many more special features of Japan Post Bank.
Postal Savings Bank, very different
The Postal Savings Bank is different, and at the business level, the most distinctive thing is the retail characteristics.
Since 2013, PSBC's retail revenue contribution has remained above 60% due to its wide range of outlets that can reach retail customers. In contrast, the CCB, ABC, ICBC and BOC tend to see this indicator below 50%.
On March 28, the 2023 annual report released by the Postal Savings Bank showed that the annual revenue was 342.507 billion yuan, a year-on-year increase of 2.25%, and the net profit attributable to the parent company was 86.27 billion yuan, a year-on-year increase of 1.23%. The analysis of the research report released by Zhongtai Securities on April 4 pointed out that the marginal slowdown in the release of provisions is the reason for the decline in the profit growth rate of the Postal Savings Bank.
The retail business continues to be an important growth pole for PSBC's performance. At the end of 2023, PSBC's personal banking business revenue increased by 6.33% year-on-year, significantly higher than the total revenue growth rate, personal banking accounted for 72.91% of operating income, an increase of 2.8 percentage points year-on-year, and the assets under management (AUM) of individual customers reached 15.23 trillion yuan.
After the release of the 2023 annual reports of the banking industry, the non-performing ratio of retail loans and credit card loans of many banks has risen, which is a signal that has been widely concerned. In terms of controlling malpractice, the Postal Savings Bank has done a relatively good job. According to the annual report, the bank's credit card non-performing rate fell to 1.71% at the end of 2023, a decrease of 0.24 percentage points from the end of the previous year.
The concern lies in the amount of money spent on the credit card. In 2023, the amount of credit card consumption of the Postal Savings Bank will be 1.14 trillion yuan, down from 1.16 trillion yuan in 2022. In addition, the number of credit card balances has also dropped from 42.82 million in 2022 to 42.4 million in 2023.
The retail business is so bright, will it dwarf the corporate business?
In the "Corporate Finance Business" chapter of the 2023 annual report of the Postal Savings Bank, the proportion of revenue is not disclosed like the "retail finance business", but we can still see the disparity between the two types of business from the deposit and loan data.
Let's start with the deposit. At the end of 2023, PSBC's customer deposits were 13.96 trillion yuan, an increase of 1.24 trillion yuan or 9.76% from the end of the previous year. Of the nearly 14 trillion yuan in deposits, 89.53% were personal deposits and only 10.45% were corporate deposits. Such a "bias" will be even more obvious in 2023, because the proportion of corporate deposits in 2022 can reach 11.24%.
A high proportion of personal deposits can lead to interest rate problems. In 2023, the average interest payment rate of PSBC's personal deposits will be 1.56%, significantly higher than the 1.33% of corporate deposits.
Let's look at loans. At the end of 2023, the total customer loans of PSBC were 8.15 trillion yuan, an increase of 938.460 billion yuan or 13.02% from the end of the previous year. The distribution of loans was relatively more balanced, with personal loans, corporate loans and bill discounting accounting for 54.86%, 39.45% and 5.69% respectively.
Between deposits and loans, it is the bank's interest margin income. PSBC's net interest margin is extremely impressive, but there is also something special about it.
Are spreads that good?
During the reporting period, the interest income of the Postal Savings Bank was 498.327 billion yuan, an increase of 24.087 billion yuan year-on-year, and the corresponding year-on-year growth rate was 5.08%. In the financial report, PSBC wrote that it has focused on building a resource allocation system based on risk-adjusted return on capital (RAROC), and the scale of interest-bearing assets has grown steadily, and the asset structure has continued to be optimized.
Interest income from personal and corporate loans fell and rose year-on-year. Let's take a look at the large-scale personal loans, the corresponding interest income was 203.786 billion yuan, a year-on-year decrease of 765 million yuan, a decrease of 0.37%. In the financial report, the Postal Savings Bank analyzed that this is mainly due to the decline in interest income of personal housing loans due to factors such as the reduction of LPR. Looking at the loans of smaller companies, the corresponding interest income was 109.188 billion yuan, an increase of 13.354 billion yuan or 13.93% year-on-year.
In 2023, the interest expense of PSBC will be 216.524 billion yuan, an increase of 15.877 billion yuan year-on-year, with a growth rate of 7.91%.
In terms of net interest margin indicators that intuitively reflect the ability to absorb gold, PSBC has achieved a far lead - the net interest margin of PSBC will be as high as 2.01% in 2023, continuing to maintain an excellent level in the industry.
How good is the net interest margin of 2.01 percent? While the net interest margin of the Postal Savings Bank remains at the level of 2 percent, the net interest margin of the other five major banks is less than 1.70 percent. Because of the heavy responsibility of empowering the real economy, the entire banking industry is facing pressure on interest margins. According to data released by the State Administration of Financial Supervision and Administration, the net interest margin of commercial banks fell to 1.69% at the end of 2023, and the net interest margin of large state-owned banks was only 1.62%. In this way, the Postal Savings Bank simply stands out from the crowd.
Unfortunately, PSBC's excellent net interest margin is not directly comparable to that of other banks. The reason arises in the "savings agency fee" that the Postal Savings Bank needs to pay to the postal group.
In 2023, the expenditure of savings agency fees and other items of the Postal Savings Bank will be 114.924 billion yuan, an increase of 12.40% year-on-year. This expense is recorded under the operating and management expenses of the PSBC's financial statements.
According to the above-mentioned Minsheng Securities Research Report, the actual deposit cost ratio of the Postal Savings Bank will increase by about 0.9 percentage points after the deposit agency fee is adjusted to interest expense. Some investors have estimated that the net interest margin of the Postal Savings Bank after adjustment is only a little more than 1%. With the repricing of interest rate cuts in the first quarter of 2024, PSBC will also face an increasingly severe test of interest margins.
Such a problem that is difficult to compare with peers has also made some investors lament that the performance of the Postal Savings Bank "seems to be good or not", which is confusing.
PSBC is also aware of the importance of spread management. At the 2023 results conference, Liu Jianjun, president of the Postal Savings Bank, pointed out that the trend of narrowing net interest margins in the banking industry may continue in the future, so medium and long-term deposits will be controlled. In terms of investment priorities, the Postal Savings Bank will focus on the differentiated growth poles proposed at the beginning of the year to promote the optimization of the credit structure.
In terms of asset quality, PSBC's non-performing loan ratio was 0.83% at the end of 2023, outperforming other major state-owned banks. It is worth noting that the proportion of "concern" loans between regular property and non-performing loans has increased significantly, from 0.56% in 2022 to 0.68% in 2023.
In this regard, Yao Hong, vice president and chief risk officer of the Postal Savings Bank, explained. According to the Economic Observer, Yao Hong pointed out that there are two main reasons for the increase in the concern rate, one is to strictly comply with the requirements of the new regulations, and some normal loans have been transferred to the concern category, and the other is to strictly identify normal loans with cross-default by individual customers.
The contribution of "middle income" is low
Non-interest income, such as intermediary business income such as fees and commissions, is an important new growth point for banks' performance. Therefore, the middle income business is also known as the "second in command" of the bank through the profit of interest margins, and is regarded as the "second curve" of performance growth.
However, under the business model of the Postal Savings Bank, its medium-income business is small in scale and has a low contribution rate.
According to the income statement, in 2023, the "net income from fees and commissions" of the Postal Savings Bank will record 28.252 billion yuan, a year-on-year decrease of 0.64%; "other non-interest net income" recorded 32.452 billion yuan, down 1.45% year-on-year. The financial report also mentioned that after excluding the one-time factor of the transformation of wealth management net worth products in the previous year, the net income of fees and commissions of the Postal Savings Bank in 2023 will increase by 12.05% year-on-year.
Compared with another large state-owned bank, China Construction Bank, it can be found that CCB's net fee and commission income in 2023 will be 115.746 billion yuan, which is much larger than that of Postal Savings Bank. Although it declined year-on-year, the decline was 0.29%, which was also smaller than that of the Postal Savings Bank.
In terms of contribution rate, the Postal Savings Bank is also slightly inferior to the China Construction Bank. According to the "Ratio of Net Fee and Commission Income to Operating Income", this indicator will be 15.04% in 2023, up 0.23 percentage points from 14.81% in 2022, and 8.25% in PSBC, down 0.24 percentage points from 8.49% in 2022.
Agriculture-related loans have become an important growth pole
Looking ahead, because of its extensive business network, PSBC's agriculture-related loans are expected to become an important driving force for balance sheet expansion.
The above-mentioned Minsheng Securities Research Report pointed out that there are two supporting reasons for being optimistic about the prospects of the Postal Savings Bank's agriculture-related loans. The first is policy support, "three rural" has long been the theme of the No. 1 document of the central government and the background of rural revitalization, which makes the market demand for agriculture-related loans worth looking forward to. The second is the Postal Savings Bank's own capabilities. In addition to the wide distribution of outlets and sinking counties, the bank's credit system construction and digital transformation are also the foundation for the fundamental improvement of its financial ability to serve the "three rural" areas.
In 2023, PSBC's increase in agriculture-related loans will reach a new high, deeply cultivating the five major customer groups of "village communities, households, enterprises and stores", with the balance of agriculture-related loans reaching 2.15 trillion yuan, an increase of 346.498 billion yuan, and the balance accounting for more than 25% of the total customer loans. It is also worth noting that in the "tax" of the company's financial report, it is specifically mentioned that according to the "Announcement on the Continuation of the Implementation of the Value-added Tax Policy on Agriculture-related Loans of the Postal Savings Bank of China's Sannong Finance Division", the implementation period of some agriculture-related tax preferential policies has been extended to the end of 2027.
But PSBC also faces rival competition. Targeting agriculture-related loans, there is also the Agricultural Bank. Agricultural Bank of China's 2023 annual results show that the increase in its county-level and agriculture-related loans has exceeded one trillion yuan, and the balance of agriculture-related loans has reached 6.55 trillion yuan, far exceeding the 2.15 trillion yuan of the Postal Savings Bank. In contrast, the Postal Savings Bank's agriculture-related loans still have a lot of room to catch up.
In the competition, whether PSBC can make use of its retail characteristics and network advantages to stand out in this "agriculture-related competition" and take advantage of the wind and rural revitalization to a new level is still an unfinished chapter.
作 者 | Have