The performance of the wealth management subsidiaries of joint-stock banks is "overtaking"

The performance of bank wealth management subsidiaries in 2023 will be significantly differentiated.

On April 24, the reporter of "International Financial News" combed through the performance data of 19 bank wealth management subsidiaries that have been disclosed so far and found that the management scale and net profit of the wealth management subsidiaries of joint-stock banks "overtaken", covering the top of the list. The net profit of the wealth management subsidiaries of two state-owned banks was "cut in half".

Some experts said that the current bank wealth management market is showing positive signs, taking into account factors such as the economic environment, regulatory policies, market interest rates and investor confidence, the scale of bank wealth management is relatively high compared with last year.

The performance of wealth management subsidiaries shrank

With the disclosure of the annual reports of listed banks, the performance of wealth management subsidiaries of banks in the past year has gradually emerged.

As of April 24, the reporter of "International Finance News" combed through the annual reports of listed banks and obtained a total of 19 brief performance of bank wealth management subsidiaries. Judging from the statistics, the performance of bank wealth management subsidiaries will be more obvious in 2023.

In terms of net profit, except for Huiyin Wealth Management, which did not disclose specific data, the remaining 18 wealth management subsidiaries will achieve a total net profit of 23.312 billion yuan in 2023. Among them, the wealth management subsidiaries of joint-stock banks occupy the top five. CMB Wealth Management ranked first with RMB3.19 billion, followed by IB Wealth Management, CNCBI Wealth Management, Ping An Wealth Management and Everbright Wealth Management with RMB2.582 billion, RMB2.255 billion, RMB1.885 billion and RMB1.764 billion respectively.

It is worth noting that the net profit of 11 wealth management subsidiaries has declined in the data disclosed so far. For example, the top two companies, CMB Wealth Management and IB Wealth Management, fell by 11.22% and 17% year-on-year respectively, while the net profit of CCB Wealth Management and ABC Wealth Management was directly cut in half. Compared with last year, 19 wealth management subsidiaries earned about 5 billion yuan less.

In addition, the scale of wealth management products has also shown a similar trend to net profit. As of the end of 2023, CMB Wealth Management, IB Wealth Management and CNCBI Wealth Management ranked among the top three in terms of management scale, while 10 companies shrank compared to the same period last year.

Why did the performance of wealth management subsidiaries decline last year?

"Market volatility and declining investor confidence have led to the reduction of the scale of wealth management products, which directly affects the revenue base of wealth management subsidiaries, while the intensification of market competition has led to an increase in marketing and service costs. At the same time, market volatility requires increased risk provisions, further increasing operating costs. In addition, the decline in the yield of wealth management products has reduced the profitability of wealth management subsidiaries, and market uncertainty has led investors to redeem wealth management products, reducing the assets under management and corresponding returns. Zeng Hengwei, a partner of Paipaiwang Wealth Management, analyzed in an interview, "The cost of regulatory compliance is also increasing. As regulatory requirements increase, wealth management subsidiaries need to invest more resources to meet compliance requirements. The volatility of the bond market and the stock market led to a decline in the net value of wealth management products, which in turn affected the overall performance of wealth management subsidiaries. ”

Wealth management subsidiary of joint-stock bank "overtaking"

In addition to the shrinkage of the scale and net profit of wealth management subsidiaries, the performance of bank wealth management subsidiaries has also shown obvious differentiation. The wealth management subsidiaries belonging to the six major state-owned banks have lost their front-row positions in terms of management scale and net profit, while the wealth management subsidiaries of joint-stock banks have come from behind to take the top spot.

In Zeng Hengwei's view, there are many reasons for the poor overall performance of the wealth management subsidiaries of large state-owned banks last year. "Affected by multiple factors such as bond market fluctuations, the product scale of wealth management subsidiaries of large state-owned banks has generally shrunk, which directly weakens their revenue and profitability. The wealth management subsidiaries of joint-stock banks and city commercial banks have enhanced their market competitiveness by innovating products and expanding distribution channels, and have also attracted some customers who originally invested in the wealth management products of major state-owned banks. Zeng Hengwei said, "In terms of investors, affected by the drainage of the stock market, some investors adjusted their asset allocation and redeemed related products to avoid risks, which further affected the scale of the wealth management subsidiaries of large state-owned banks." In the process of transforming from expected income wealth management products to net worth wealth management products, investors' acceptance of new products is not high, which also brings certain resistance to the scale expansion of wealth management subsidiaries. ”

The performance of the wealth management subsidiaries of joint-stock banks is due to their flexible adjustment of product strategies, the expansion of out-of-bank distribution channels and the optimization of customer experience. Zeng Hengwei said that the wealth management subsidiaries of joint-stock banks are more sensitive to market dynamics and flexibly adjust product design and issuance strategies to meet the diversified needs of investors. At the same time, it actively expanded the distribution channels outside the bank, built a diversified sales network, and effectively expanded its market share. In terms of customer experience, we focus on improving the quality of customer service and optimizing the investor experience, so as to enhance customer stickiness and attract new customers.

Taking Qingyin Wealth Management as an example, Bank of Qingdao pointed out in its annual report that in 2023, there will be 12 new out-of-bank distribution channels of Qingyin Wealth Management, bringing the total number to more than 30, and the scale of out-of-bank consignment sales will be 95.386 billion yuan, accounting for 45.83%.

Performance benchmarks have been lowered

In fact, the reporter noticed that recently, a number of wealth management subsidiaries such as Huaxia Wealth Management, Everbright Wealth Management, Ping An Wealth Management, and CCB Wealth Management have adjusted the performance benchmarks of their products, with reductions ranging from 10 to 130 basis points, and the lower limit of the performance benchmarks of some products has dropped to less than 3%.

Liu Yuqi, chief strategy officer of Kurosaki Capital, said that the adjustment of the performance benchmark of wealth management products is affected by multiple factors. First of all, the downward trend of market interest rates puts pressure on the expected rate of return of wealth management products. At the same time, regulatory policies have guided the yield of wealth management products to decline, which will help the market break the belief in rigid redemption. The wave of redemptions may also prompt a reassessment of performance benchmarks to accommodate market and investor movements. Secondly, credit risk occurs from time to time, and the performance of other types of assets is weak, and investors' risk appetite tends to be rational and tends to choose low-risk wealth management products.

It is worth noting that since the beginning of this year, the scale of bank wealth management has continued to rise. Everbright Securities pointed out in the research report that since the beginning of 2024, bank wealth management has been "excellent in both quantity and price". After the cross-quarter return at the end of March, the scale of wealth management has increased by 1.9 trillion yuan since April.

"The recovery of the fixed income asset market and the recovery of investors' confidence in bank wealth management have provided the foundation for scale growth. The reduction in deposit rates has also prompted the flow of funds to wealth management products. "Although the market is showing positive signs, whether the scale of wealth management will increase significantly still needs to consider a combination of factors such as the economic environment, regulatory policies, market interest rates and investor confidence." Judging from the current overall environmental assessment, the probability of maintaining growth in the scale of bank wealth management is relatively high compared with last year. ”