Several listed banks achieve high growth in mid-range revenue

As the operating results of listed banks for the first half of 2024 are successively disclosed, most banks have achieved positive growth in net profits, with intermediate business income playing a crucial role in profit contribution. At the same time, due to weak credit market demand, the growth rate of retail loans has significantly decreased compared to that of corporate loans, while small and medium-sized banks still maintain a high enthusiasm for bond investments. In terms of asset quality, listed banks continue to intensify the disposal of non-performing assets, and the non-performing loan ratio remains stable. However, the scale of bad debts in consumer loans and business loans, among other individual loans, is on the rise, and the non-performing loan ratio of individual loans has shown an "upward" trend.

Intermediate income is "eye-catching"

Amid the continuous narrowing of interest spreads, intermediate business income is regarded as the second growth curve of bank performance. Looking at the first-half report cards of banks that have been announced, many banks have seen a significant increase in intermediate business income.

On August 16, Jiangsu Bank (600919.SH) released its semi-annual report for 2024. The report shows that as of the end of June, the bank achieved a total operating income of 41.625 billion yuan, a year-on-year increase of 7.16%; the net profit attributable to the parent company reached 18.731 billion yuan, a year-on-year increase of 10.05%. In the structure of operating income, net interest income was 27.656 billion yuan, a year-on-year increase of 1.76%, while net fees and commissions were 3.029 billion yuan, a year-on-year increase of 11.3%.

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The same is true for two listed banks in Jiangsu, Nanjing Bank (601009.SH) and Changshu Bank (601128.SH). Nanjing Bank's semi-annual report for 2024 shows that as of the end of the reporting period, the bank achieved a total operating income of 26.216 billion yuan, an increase of 1.912 billion yuan year-on-year, a year-on-year increase of 7.87%. Among them, net interest income was 12.811 billion yuan, a year-on-year decrease of 5.97%; net non-interest income was 13.405 billion yuan, a year-on-year increase of 25.51%.

Changshu Bank's semi-annual report for 2024 shows that as of the end of the reporting period, the bank achieved a total operating income of 5.506 billion yuan, a year-on-year increase of 12.03%. Among them, net interest income was 4.602 billion yuan, a year-on-year increase of 6.1%; net non-interest income was 904 million yuan, a year-on-year increase of up to 56.59%.

For the joint-stock bank, Shanghai Pudong Development Bank (600000.SH), the performance of intermediate business income is also better than that of interest income. Shanghai Pudong Development Bank's semi-annual report for 2024 shows that as of the end of the reporting period, the bank achieved a total operating income of 88.248 billion yuan, a year-on-year decrease of 3.27%; the net profit attributable to the shareholders of the parent company was 26.988 billion yuan, a year-on-year increase of 16.64%. In the structure of operating income, the bank achieved net interest income of 58.046 billion yuan, a year-on-year decrease of 3.94%; net non-interest income was 30.202 billion yuan, a year-on-year decrease of 1.95%.

Where is the high growth of intermediate business of listed banks concentrated? The semi-annual report for 2024 shows that Jiangsu Bank's agency handling fee income and credit commitment handling fee and commission income were 1.86 billion yuan and 845 million yuan, respectively, with year-on-year increases of 30.73% and 7.09%. Nanjing Bank's bank card and settlement business, agency and consulting business, loan and guarantee and asset custody business were 107 million yuan, 1.27 billion yuan, 713 million yuan, and 181 million yuan, respectively, with year-on-year increases of 49.78%, 23.83%, 44.21%, and 31.85%. Changshu Bank's agency business income was 120 million yuan, accounting for 75% of the handling fee and commission income, with a year-on-year increase of 113.23%.

A person from a joint-stock bank introduced to the reporter: "Intermediate business income can be divided into many sub-businesses such as bank cards, agency, wealth management, settlement and clearing, custody, consulting, guarantee commitment, etc. Among them, agency, wealth management, consulting, and other businesses are strategic businesses that banks are deploying. Under normal circumstances, due to the stability and low risk of intermediate business income, the industry's evaluation of banks with higher intermediate business income is also better."

However, the person also mentioned that due to the significant reduction in bank fees and benefits in recent years, and the continuous increase in regulatory efforts to combat arbitrary charging, the reasons for the growth of bank intermediate business income need to be determined based on specific situations. "We should not seek quick success and instant benefits, but find the bank's positioning accurately, standardize business development, in order to steadily promote the sustainable growth of intermediate business."Rise in Non-Performing Loan Ratio for Individual Loans

From a credit perspective, listed banks have increased their lending efforts in the first half of 2024. However, due to weak market demand, the growth of retail loans has slowed, and asset quality has fluctuated.

Shanghai Pudong Development Bank disclosed in its semi-annual report that as of the end of the reporting period, the bank's total loan balance in local and foreign currencies was 5.31 trillion yuan, a 5.92% increase from the beginning of the year. Among them, the corporate loan balance was 3.11 trillion yuan, a 9.49% increase from the beginning of the year; the retail loan balance was 1.85 trillion yuan, a decrease of 20.709 billion yuan from the beginning of the year. In terms of asset quality, the non-performing loan ratio for individual loans was 1.54%, an increase of 0.12 percentage points from the beginning of the year. Among them, the non-performing loan ratios for consumer loans, business loans, and personal housing loans were 2.98%, 1.6%, and 0.75%, respectively, all showing varying degrees of increase from the beginning of the year.

Nanjing Bank's semi-annual report for 2024 showed that as of the end of the reporting period, the bank's loans and advances amounted to 1.21 trillion yuan, a 9.74% increase from the beginning of the year. Among them, the corporate loan balance was 918.578 billion yuan, a 12.7% increase from the beginning of the year; the individual loan balance was 288.129 billion yuan, a 1.46% increase from the beginning of the year.

Nanjing Bank stated that as of the end of the reporting period, the non-performing loan ratio for individual loans of the parent company was 1.64%, an increase of 0.14 percentage points from the end of the previous year. During the reporting period, the company's credit card business saw a decrease in non-performing loan ratios; the asset quality of housing mortgage loans remained stable with a slight increase in non-performing loan ratios; the scale of the parent company's consumer loans and individual business loans slightly shrank, and the non-performing loan ratios increased, with overall risks controllable.

Changshu Bank's semi-annual report for 2024 showed that as of the end of the reporting period, the bank's total loan scale was 238.934 billion yuan, a 7.42% increase from the beginning of the year. The corporate loan scale was 88.666 billion yuan, a 14.58% increase from the beginning of the year. The individual loan scale was 136.135 billion yuan, a 3.07% increase from the beginning of the year. In terms of asset quality, the non-performing loan ratio for corporate loans was 0.66%, a significant decrease from 0.83% at the beginning of the year; the non-performing loan ratio for individual loans was 0.91%, an increase of 0.13 percentage points from the beginning of the year. Among them, the non-performing loan ratios for consumer loans and business loans were 0.86% and 0.91%, respectively, both showing an increase of 0.07 percentage points and 0.13 percentage points from the beginning of the year.

A securities analyst stated that banks increased credit supply in the first half of the year, with the growth rate of corporate loans significantly higher than that of retail loans, and overall credit demand in the retail market was weak. From the perspective of asset quality, the banking industry is currently increasing the disposal of non-performing assets, with the overall non-performing loan ratio remaining stable, but there has been a noticeable increase in the non-performing loan ratio for individual loans.

"In recent years, consumer loans and business loans have been an important focus of bank business. However, risks have been exposed, which is a test of the banks' risk control capabilities. There will be a significant difference in the non-performing loan ratios of loans in this area among different banks, with severe differentiation. Banks in good condition maintain a non-performing loan ratio below 1%, but some banks may have a non-performing loan ratio exceeding 3%." The analyst revealed to the reporter that banks continue to maintain the intensity of credit supply for consumer loans, business loans, and other individual loans, but risk control reviews will be stricter.

In addition, the reporter noticed that in the first half of this year, small and medium-sized banks continued to increase their investment in bonds.

Jiangsu Bank's semi-annual report showed that as of the end of the reporting period, the balances of the bank's trading financial assets and other debt investments were 545.019 billion yuan and 314.535 billion yuan, respectively, with increases of 29.4% and 23.51%. Among the trading financial assets, bond investments amounted to 136.9 billion yuan, a 5.46% increase from the end of the previous year; among other debt investments, bond investments amounted to 300.7 billion yuan, a 22.95% increase from the end of the previous year.Nanjing Bank's 2024 semi-annual report disclosed that as of the end of the reporting period, the bank's investment scale in government bonds, financial bonds, and corporate bonds was 315.805 billion yuan, 194.575 billion yuan, and 111.593 billion yuan, respectively, totaling 621.973 billion yuan, an increase of 11.47% from 557.982 billion yuan at the beginning of the year.

Changshu Bank's 2024 semi-annual report shows that as of the end of the reporting period, the bank's investment scale in national treasury bonds, local government bonds, and corporate bonds was 17.787 billion yuan, 30.345 billion yuan, and 10.582 billion yuan, respectively, totaling 58.714 billion yuan, an increase of 2.39% from the beginning of the year.

"Amid the current market facing an asset shortage, banks generally face pressure in increasing loan scale. In the short term, banks' bond investments can bring relatively good returns. However, as the market environment changes and regulatory policies tighten, the model that solely relies on bond investments will become increasingly unsustainable," said the aforementioned analyst. The core competitiveness of banks still lies in customer management, which requires banks to enhance their customer service capabilities and risk control capabilities, and create differentiated competitive advantages through innovative models and products.