Net profit growth of Fumin Bank in the six years since its opening has stagnated And the compliance problems of more than 10 million businesses with fines and fines have been exposed

Yangtze River Business Daily news ● Yangtze River Business Daily reporter Cai Jia

In the sixth year of its opening, Chongqing Fumin Bank faced huge fines while its performance growth was sluggish.

A few days ago, the Chongqing Banking and Insurance Regulatory Bureau disclosed the penalty information for Fumin Bank, because of 17 problems such as unfair pricing of related party transactions, the transmission of benefits to related parties, and the occupation of credit funds by shareholders, the Chongqing Banking and Insurance Regulatory Bureau decided to fine Fumin Bank 8.5 million yuan, and the chairman, president, vice president and other relevant responsible persons of the bank were fined together.

The reporter of Changjiang Business Daily noted that this is the third time that Fumin Bank has received a fine since it officially opened in August 2016, and the single penalty amount is the highest, which is relatively rare among private banks. Previously, in March 2020, Fumin Bank was fined 2.1485 million yuan by the Chongqing Business Management Department of the central bank.

In fact, although private banks have not been in business for a long time, their own problems are gradually being exposed, and many private banks, including Minshang Bank, Xinnet Bank, Huarui Bank, etc., have received huge fines this year.

On the other hand, with the tightening of supervision and the strengthening of industry standardization, how to improve profitability through innovative financial products under the premise of business compliance is also an urgent problem for private banks to solve.

Unlike the rapid growth trend in previous years, the growth rate of Fumin Bank's performance has slowed down significantly since last year. In 2020 and the first half of 2021, Fumin Bank achieved net profits of 216 million yuan and 162 million yuan respectively, down 0.96% and 4.27% year-on-year, and the bank's total assets at the end of the first half of the year were 52.843 billion yuan, a slight contraction from the end of the previous year. Previously, from 2017 to 2019, the net profit growth rate of Fumin Bank was above 300%.

A number of private banks have received million-level fines

Private banks continued to pay large fines during the year.

At the end of last month, the Chongqing Banking and Insurance Regulatory Bureau disclosed an administrative penalty information on its official website. The Chongqing Banking and Insurance Regulatory Bureau decided to impose a fine of RMB8.5 million on Chongqing Fumin Bank for 17 violations of laws and regulations, including unfair pricing of related party transactions, the transmission of benefits to related parties, inadequate control of related party transactions, acceptance of loans for false purposes in the loan assistance business with related parties, weakening the review of the investment business of related enterprises, the occupation of credit funds by shareholders, serious imprudent risk control, and regulatory arbitrage evasion of business substance. At the same time, among the relevant responsible persons, Zhang Guoxiang, chairman of Fumin Bank, was fined 500,000 yuan, President Chu Longchun was fined 300,000 yuan, Vice President Zhong Ziming was fined 200,000 yuan, and Li Bingyang was warned.

In this regard, Fumin Bank quickly responded, saying that the above related matters are routine business inspections of the bank by the regulatory authorities in 2020, and the bank attaches great importance to the problems pointed out by the regulator in the inspection, and in accordance with the requirements of the inspection opinions, in response to the problems found in the on-site inspection, adhere to the principle of learning from each other, strictly formulate rectification measures, further improve the system, optimize the process, and have basically completed the rectification.

The reporter of Changjiang Business Daily noted that in the five years since its opening, Fumin Bank received the first fine from the central bank in October 2019, with a penalty of 10,000 yuan. In March last year, Fumin Bank was warned and fined 1.845 million yuan by the Chongqing Business Management Department of the central bank for seven illegal acts involving false reporting and concealment of financial statistics, confiscating about 303,500 yuan of illegal gains, and forfeiting a total of 2.1485 million yuan. After a year and a half, Fumin Bank was fined again, and the amount of fines reached the highest level of the bank since its inception, and the two penalties were fined more than 10 million.

This year is the seventh year of the establishment of the first batch of private banks, and problems such as weak internal control of private banks have gradually been exposed. In fact, before Fumin Bank, a number of private banks had received large fines during the year, and the facts of violations of laws and regulations involved were not the same, and the compliance of private banks had a long way to go.

In March this year, Wenzhou Minshang Bank was fined 2.25 million yuan for six violations, including serious imprudent pre-loan investigations, loans to companies with major bad credit records, and fixed asset loans to real estate projects with insufficient capital, which was also the first fine the bank received since its opening.

In July, Sichuan-based Xinnet Bank was fined 6.3 million yuan by the Chengdu branch of the central bank for failing to perform customer identification obligations in accordance with regulations, failing to keep customer identity information and transaction records in accordance with regulations, failing to submit large transaction reports or suspicious transaction reports in accordance with regulations, and trading with unidentified customers, setting a new record for large fines imposed on private banks.

Last month, Huarui Bank, one of the first five private banks in the country, was fined a total of 5.2058 million yuan for failing to disclose information in accordance with regulations, appointing senior management personnel without qualifications and permission, failing to approve the board of directors for major related party transactions, issuing credit loans to related parties in violation of regulations, serious violations of prudential operation rules in the management of credit concentration, and allowing borrowers to use working capital loans for equity investment.

Last year's performance fell for the first time and the speed of asset expansion slowed down

Compared with the rapid growth trend of previous years, the overall growth of private banks' performance in the past two years has slowed down and shown a polarization trend. And due to the short establishment time, fewer business outlets or no physical outlets, private banking business development is facing new challenges.

According to the data, Fumin Bank is the first private bank in the central and western regions, jointly initiated by seven private enterprises in Chongqing, namely Hanhua Financial Holdings, Zongshen Group, Fu'an Pharmaceutical, Yujiang Die Casting, Haite Environmental Protection, Taoranju and Born Technology, with a registered capital of 3 billion yuan, and was approved to open in August 2016. Among them, Hanhua Financial Holdings, a Hong Kong-listed company, holds 30% of the shares and is the largest shareholder of the bank.

According to the annual reports disclosed by Hanhua Financial Holdings over the years, the performance of Fumin Bank showed explosive growth in the three years before its opening. From 2016 to 2019, The net profit of Fumin Bank was 1.8 million yuan, 10.8 million yuan, 52.6 million yuan and 219 million yuan, respectively. Among them, from 2017 to 2019, the net profit of Fumin Bank increased by 500%, 387% and 315.4% respectively year-on-year.

In 2020, Fumin Bank achieved a total revenue of 1.715 billion yuan, an increase of 64% year-on-year, but a net profit of 216 million yuan, a slight decrease of 0.96% year-on-year, the first decline in performance since its opening. In the first half of this year, the net profit of Fumin Bank was 162 million yuan, a year-on-year decline of 4.27%.

The reporter of Changjiang Business Daily combed and found that due to the short period of establishment and the constraints of fewer business outlets or no physical outlets, private banks have been facing the problem of collecting reserves. In 2018, smart deposit products of private banks emerged, and Fumin Bank also launched a related product "Fuminbao" to accelerate its expansion with the help of Internet channels.

From 2016 to the end of 2020, the total assets of Fumin Bank reached 7.432 billion yuan, 18.363 billion yuan, 37.02 billion yuan, 45.152 billion yuan and 53.177 billion yuan, respectively. Among them, the asset scale from 2017 to the end of 2020 increased by 147%, 101.6%, 22% and 17.77% respectively compared with the end of the previous year.

However, with the release of new regulations on Internet deposits at the beginning of the year, the blind expansion of local legal persons in different places was stopped, and many private banks that had previously collected deposits through Internet channels had different degrees of balance sheet reduction, and the gap between them and the Internet private banks with huge traffic advantages widened.

As of the end of June this year, The Bank had total assets of 52.843 billion yuan, and the expansion of assets came to an abrupt end. Its total liabilities of 49.164 billion yuan also shrank slightly from the end of the previous year.

Some market participants said that with the continuous standardization of policies, the tightening of supervision, the difficulty of private banks to collect deposits, how to develop innovative products under the premise of ensuring business compliance, continue to improve profitability, or private banks need to solve the next problem.

Editor-in-charge: ZB

This article originated from the Yangtze River Business Daily