Differentiated strategies boost China's city and rural commercial banks in 2018

Differentiated business strategies have boosted China’s listed city and rural commercial banks in 2018, with leading players like Bank of Ningbo and Wuxi Rural Commercial Bank recording strong results and healthier development, their annual reports showed.

Thanks to the robust performance of its retail banking business, the Ningbo-based city commercial lender saw its revenue and net profit surge 14.2 percent and 19.8 percent year on year, respectively, to hit 28.9 billion yuan (US$4.3 billion) and 11.18 billion yuan.

As of the end of 2018, Bank of Ningbo boasted 137.06 billion yuan of personal loans balance, up almost one third from the beginning of the year.

Meanwhile, the lender saw its non-performing loan ratio fall for five consecutive quarters to 0.78 percent, well below the sector average of 1.89 percent.

The city bank attributed the strong results to its strategic transformation toward the retail banking segment, and its efforts to improve customer experience by leveraging technologies.

In 2018, it launched the "211 Project," which encouraged each of its sub-branches to serve 20,000 retail customers, 1,000 private business customers and 100 corporate clients within three years.

The move aims to expand the coverage of its financial services through consolidating its basic banking services and customer base, the bank said in their earnings announcement.

Wuxi Rural Commercial Bank, which went public on the A-share market in 2016, also posted strong results for 2018 by making full use of its geographical advantages.

The lender witnessed its operating income rising 11.95 percent year over year to reach 3.192 billion yuan. The net profit attributable to its shareholders totaled 1.09 billion yuan, up 10.11 percent compared with a year ago.

As the only local bank in Wuxi, a prosperous city in southern Jiangsu Province, Wuxi Rural Commercial Bank has a widespread network throughout the city, which has greatly facilitated its capabilities for attracting deposits.

Data from its annual report showed that at the end of 2018, the bank’s deposits grew by 8.41 percent to stay at 115.8 billion yuan, accounting for 81 percent of its total liabilities, the highest proportion among listed rural lenders.

China currently has 27 listed city and commercial banks. Data from the banking regulator indicated that assets of those small players totaled 64.54 trillion yuan as of the end of 2017, which made up for around a quarter of the country’s whole banking industry assets.