On the evening of April 26, Qilu Bank released its 2023 annual report, achieving operating income of 11.952 billion yuan, a year-on-year increase of 8.03%, a net profit of 4.269 billion yuan, a year-on-year increase of 17.58%, and a non-performing loan ratio of 1.26%, a decrease of 0.03 percentage points from the end of 2022. The total assets were 604.816 billion yuan, standing at the 600 billion mark.
This is Zheng Zugang's first complete annual performance after taking office. Go back a year ago. In March 2023, he was just transferred from a major state-owned bank to Qilu Bank as chairman. Zheng Zugang, who was born in 1972, is a "veteran of the Agricultural Bank of China" and has served as a member of the party committee and vice president of the Shandong branch of the Agricultural Bank of China, and secretary of the party committee and president of the Tianjin branch.
Zheng Zugang (picture from the Internet)
However, along with the release of the annual report, there is also the "Statistics on the Number of Penalties for A-share Listed Banks in the First Quarter of 2024". Flush iFinD statistics show that in the first quarter of 2024, the State Administration of Financial Supervision and Administration, the People's Bank of China and the State Administration of Foreign Exchange issued more than 500 fines to banking institutions, with a fine amount of nearly 400 million yuan. In the camp of city commercial banks, Qilu Bank "came out on top", followed by Mengshang Bank, Zhongyuan Bank and Bank of Beijing.
The first 10-million-level fine reflects the hard flaws of compliance and internal control
At the beginning of January this year, the Shandong Supervision Bureau of the State Administration of Financial Supervision and Administration released the administrative penalty information disclosure form, showing that Qilu Bank was not in place due to the lack of management of related party transaction loans, the management of small and micro enterprises, the management of working capital loans, the management of real estate loans, the management of personal loans, and the management of interbank investment business. More than 10 violations of laws and regulations, such as issuing credit loans to related parties and failing to manage them, were confiscated and fines totaling about 14.9513 million yuan. Two executives were warned or punished, including Tao Wenzhe, then assistant to the president and vice president of Qilu Bank, and others.
It should be noted that this is the first 10-million-level fine received by a banking institution in 2024, and it is also the largest fine in the first quarter. "Inadequate management" has become a flaw in Qilu Bank's internal control. According to the reasons for the notification, there were 6 cases in which the management of various types of loans was not in place.
As a local city commercial bank serving small and micro enterprises, the bank also has several related violations involving small and micro enterprises. According to the official website of Qilu Bank, the company's customers account for 97% of small, medium and micro enterprises, and the scale of inclusive small and micro loans ranks first among urban commercial banks in Shandong Province.
According to the observation of the reporter of Nandu Bay Finance Society, in the past year, although the performance of Qilu Bank has increased, the internal control problems exposed by the fine are still significant. In August 2023, Qilu Bank was fined 2.975 million yuan by the Jinan Branch of the People's Bank of China, including 8 fines including incorrect financial statistical indicator data and omission of financial consumer complaint data. Ge Ping, then vice president of Qilu Bank, was fined 15,000 yuan. It should be noted that the above two named executives, Ge Ping and Tao Wenzhe, are both "veterans" who have served in the bank since the predecessor of Qilu Bank. Just two days ago, on April 26, Qilu Bank announced that Ge Ping resigned as vice president due to work adjustments.
According to the statistics of the Enterprise Early Warning Platform, Qilu Bank (including its holding subsidiaries) received 10 fines in 2023, with a cumulative fine amount of more than 20 million yuan, and the fines mainly came from credit business and internal control issues.
Qilu Bank, headquartered in Jinan, is one of the first city commercial banks in China and the first in Shandong Province to set up and introduce overseas strategic investment, and was listed on the Shanghai Stock Exchange in June 2021. According to Wind data, the Commonwealth Bank of Australia is currently the largest shareholder of the bank, with a shareholding ratio of 15.84%, and Jinan State-owned Assets Operation Co., Ltd. is the second largest shareholder, with a shareholding ratio of 10.03%. In addition, Chongqing Huayu Group Co., Ltd., which holds more than 5% of the bank's equity, holds 91% of the equity held by the judiciary.
For Zheng Zugang, who is at the helm, it may not be difficult to maintain stable performance, do a good job in risk management, and improve compliance and internal control. The reporter noted that during his tenure as the "number one" of the Tianjin Branch of the Agricultural Bank of China, he made good achievements in promoting digital transformation, serving the development of the real economy, and dealing with financial risks. According to Tianjin Daily, in 2022, the Tianjin Branch of the Agricultural Bank of China coordinated the promotion of epidemic prevention and control and operation and management, and the total scale of deposits and loans remained the first in the industry for many consecutive years, and the balance of savings deposits in the industry took the lead in exceeding 300 billion yuan, and the annual increase in loans to legal entities hit a new high in the past three years.
A detail worth noting is that the reporter of Nandu Bay Finance Society noticed that inheriting the pragmatic style of a large state-owned bank, Zheng Zugang was quite low-key after taking office. On the official website of Qilu Bank, there are many public reports about the former chairmen, but a search for "Zheng Zugang" shows no results.
A new test for financial veterans: 6% from the highest point, whether the measures to stabilize stock prices have worked
However, for this veteran of the Agricultural Bank of China, there is no shortage of new problems and new tests.
As early as 2021, Qilu Bank officially landed on the A-share market with an issue price of 5.36 yuan per share, and the bank's share price climbed to the highest point of 12.07 yuan per share.
Back on July 18 last year, Qilu Bank issued an announcement saying that the bank's closing price for 20 consecutive trading days was lower than the company's latest audited net assets per share, triggering the conditions for the start of stock price stabilization measures, and the company took measures to stabilize the stock price by shareholders holding more than 5% of the shares. The reporter noted that on January 18 this year, Qilu Bank issued the "Announcement on the Completion of the Implementation of Stock Price Stabilization Measures", saying that the implementation of stock price stabilization measures has been completed. The relevant shareholding increase entities have increased their holdings of about 14.17 million shares of the company through centralized bidding through the Shanghai Stock Exchange trading system or through Shanghai-Hong Kong Stock Connect, accounting for 0.30% of the company's total share capital, with a cumulative increase of about 56.3 million yuan, and the transaction price range is 3.81 yuan to 4.21 yuan per share.
As of the close of trading on April 26, 2024, Qilu Bank's share price was 4.54 per share, which has recovered, but it is still down about 60% from its peak.
The "coldness" of the equity auction market is also worth noting. In November last year, the second auction of 35 million shares of Qilu Bank was successful, and the transaction price was 134 million yuan, a price reduction of 13 million yuan from the starting price. A month ago, Ali's judicial auction platform showed that the equity had been auctioned at a price of 147 million yuan, but it was ultimately unsold because no one bid. Some analysts believe that the continued slump in the stock price may be one of the reasons for the bank's equity auction for the first time, and investors are worried about the unspeakable gains in equity appreciation.
At the same time, looking at the market in Shandong and even North China, Zheng Zugang inevitably has a "benchmarker" in his sight that cannot be ignored, that is, Bank of Qingdao.
The reporter of Nandu Bay Finance Society compared and saw that in Shandong City Commercial Bank, the "first brother dispute" between Qilu Bank and Bank of Qingdao is becoming increasingly fierce. According to the latest financial report, Bank of Qingdao (002948.SZ) operating income in 2023 will be 12.472 billion yuan, a year-on-year increase of 7.11%, net profit attributable to the parent company will be 3.549 billion yuan, a year-on-year increase of 15.11%, and total assets will be 607.985 billion yuan, also standing at the 600 billion mark. A number of key data from the two banks are quite close and tightly bite.
However, Bank of Qingdao has become the first local corporate banking institution in Shandong Province with total assets under management exceeding 800 billion yuan, which will inevitably put Qilu Bank under "great pressure".
It is interesting to note that after Qilu Bank "led" at the beginning of the year due to a 10-million-level fine, Bank of Qingdao was also "not far behind". According to the violation penalty data of listed banks in the first quarter of 2024, Bank of Qingdao received 5 fines totaling 2.15 million yuan in the first quarter, and the amount of penalties and the number of fines also have a "place" among listed city commercial banks.
For Zheng Zugang, the chairman of the "post-70s" generation, how to balance the quality of internal control, scale expansion and capital market attitude of Qilu Bank in the future may be his "compulsory course". And whether he can win the title of the largest city commercial bank in Shandong may also be an exam question that he needs to think about.
Written by: Lu Liang, reporter of Nandu Bay Finance Agency