CEB Bank performance communication meeting highlights: The stock market rebound has little overall impact on the wealth management industry

On November 4th, CEB Bank held a performance briefing for the third quarter of 2024.

Board Secretary Zhang Xuyang, General Manager of Strategic Management and Investor Relations Ma Ning, General Manager of Financial Accounting Department Lu Jian, General Manager of Risk Management Department Ma Bo, General Manager of Retail and Wealth Management Department Wu Nina, Deputy General Manager of Risk Management Department Wang Haidong, Deputy General Manager of Asset and Liability Management Department Huang Guangming, and Assistant General Manager of Financial Markets Department Ma Jingjing attended the meeting.

Expected Revenue Improvement Next Year

Regarding the lack of significant effects on revenue growth this year and the subsequent improvement measures, Board Secretary Zhang Xuyang introduced that based on the operating conditions of the first three quarters, CEB Bank's overall operations have shown a stable and improving development trend.

Among them, the cost of corporate and retail deposits decreased by 11 basis points and 19 basis points year-on-year, respectively, with overall improvement in deposit costs effectively alleviating the pressure of declining interest margins; the non-performing loan ratio remained stable at 1.25%, maintaining stable asset quality; and the capital adequacy ratios at all levels have improved, with the revenue decline narrowing quarter by quarter.

Looking ahead to next year, it is expected that the trend of stable improvement in CEB Bank's revenue will be further consolidated. With the gradual introduction of a "package" of regulatory policies, new momentum for economic growth will continue to emerge, and the operating environment for the banking industry will also improve.

Actively Promoting Real Estate Financing Coordination Mechanism

Regarding the development of the real estate market, General Manager of Risk Management Department Ma Bo introduced that CEB Bank seizes opportunities by establishing a working group at the head office and branches to actively promote the real estate financing coordination mechanism, refine the due diligence exemption mechanism, and accelerate the investment in projects ensuring housing delivery. The approval and investment rates for "white list" projects continue to rise, and the total amount of real estate loans across the bank remains stable, with development loans achieving positive growth compared to the beginning of the year.

In the next phase, CEB Bank will further implement the central government's decision-making and deployment, focusing on "good regions, good locations, and good projects" that are well understood, continuously improving credit access management, and steadily and orderly carrying out real estate credit business. It will support residents' rigid and improved housing needs with city-specific policies, continuously optimize housing financial services for new citizens, grasp high-quality business formats and projects that meet commercial principles and cash flow coverage, enhance service levels for the construction of the "three major projects" in real estate and the development of the housing rental market, and promote the stable and healthy development of real estate.

At the same time, it will seize the policy window period, effectively utilize phased support policies such as the "Sixteen Financial Measures" and "Operating Property Loans," and adhere to classified policies and tailored strategies for at-risk projects. It will comprehensively use litigation recovery, bankruptcy pre-restructuring, and other means to revitalize project assets, mitigate risks of existing projects, actively follow up on incremental policies such as market-oriented acquisitions of land by enterprises and refinancing for affordable housing, and promote the resolution of existing risks.

The Stock Market Rebound Has Little Overall Impact on the Wealth Management Industry

Regarding the growth of CEB Wealth Management's scale since the third quarter, whether the stock market rebound has put certain pressure on the wealth management industry, and how to better promote the development of related businesses in the next phase?

Board Secretary Zhang Xuyang introduced that since the third quarter, CEB Wealth Management has adhered to high-quality development, with all businesses operating smoothly. Recent strong measures taken by various central departments have effectively boosted confidence in the capital market, and wealth management products are mainly fixed-income types, with the stock market rebound having little overall impact on the wealth management industry. Currently, CEB Wealth Management's product performance is stable. As of the end of September, the total scale of wealth management managed by CEB Wealth Management reached 1.5847 trillion yuan, an increase of 272.4 billion yuan from the beginning of the year, with a growth rate of 20.8%. The management fee income from new wealth management products reached 2.756 billion yuan, an increase of 9.1% compared to the same period last year.

In the next step, CEB Wealth Management will continue to enrich and improve the "Colorful Sunshine" product system. Based on strengthening stable investment and absolute return strategy wealth management products, it will gradually diversify wealth management products with "fixed income +" and other investment strategies to meet the multi-level return-risk preferences and allocation needs of wealth management investors, creating sustainable value returns for investors.

At the same time, it will adhere to the integration of asset management and wealth management, further enhancing investment research capabilities. It will continuously improve the systematic architecture of production-research-investment, grasp market trends, increase exploration and enhancement in equity and fixed income + fields, explore new assets such as cross-border, broad fixed income, and derivatives, cultivate a modular asset organization allocation mechanism, effectively enhance multi-asset, multi-strategy, all-weather investment service capabilities, and provide diversified financial services to the public and the real economy.

Bond Portfolio Maintains Short to Medium Duration

Recently, the bond market has experienced significant fluctuations. How to manage the interest rate risks brought by market volatility and how to forecast the income performance related to financial market investments in the second half of the year?

Ma Jingjing, Assistant General Manager of the Financial Market Department, stated that with the recent intensive introduction of macro policies, the bond market has fluctuated. CEB Bank leverages its market judgment capabilities to strengthen the forward-looking and flexible management of the bond portfolio, reasonably arrange the allocation rhythm and types. Currently, the bond portfolio maintains a short to medium duration, and the overall interest rate risk is controllable.

Looking ahead, short-term interest rates will benefit from the easing of the funding environment and remain at a relatively low level. Long-term interest rates may rise slightly as bond supply increases and the effects of macro policies gradually manifest, but there is a ceiling on interest rate increases, and the curve will maintain a steep shape.

CEB Bank will continue to adjust its portfolio investment strategy based on market trends and the overall operating conditions of the bank, ensuring the unity of safety, liquidity, and profitability of its proprietary investment portfolio while maintaining risk bottom lines and regulatory compliance.

Net Interest Margin Stabilizes After Decline

Regarding whether the interest rates of new loans issued by CEB Bank in the third quarter have stabilized, the performance of corporate and retail loans, and the outlook for next year's net interest margin trends.

Huang Guangming, Deputy General Manager of the Asset and Liability Management Department, stated that since the third quarter, CEB Bank has actively adjusted its pricing management policy following the decline of the LPR in July. At the same time, it has reasonably grasped the rhythm of changes in loan interest rates, with new corporate and retail loan interest rates stabilizing after a decline.

The bank will continue to focus on key areas, dynamically plan business management strategies following the decline of the LPR, further increase support for the real economy, and reasonably grasp the rhythm of changes in loan interest rates to enhance risk pricing capabilities and levels. It is expected that CEB Bank's loan interest rates will stabilize after a decline.

On the liability side, CEB Bank will actively participate in the operation of the market-oriented adjustment mechanism for deposit interest rates, agilely adjust deposit pricing management strategies, strengthen classified and differentiated management of deposits, increase efforts to adjust deposit structures, and promote the optimization of deposit costs. It is expected that CEB Bank's deposit costs will further decline Overall, it is expected that the net interest margin level of CEB Bank will stabilize next year, maintaining the sustainability of support for the real economy.

How to View the Risks of Consumer and Mortgage Loans

Regarding the current non-performing pressure on CEB Bank, which mainly comes from various aspects, and the trend of asset quality throughout this year and into next year, General Manager of the Risk Management Department Ma Bo stated that the current economic operation still faces many difficulties, including weak expectations, the repair of household leverage, and the continuous release of risks in key areas, making asset quality management indeed face many challenges.

As of the end of September, CEB Bank's overall non-performing loan ratio was 1.25%, remaining stable compared to the end of June and the beginning of the year, with the risk of consumer loans showing an upward trend; on the other hand, during this round of deep adjustment in the real estate market, with falling housing prices and declining transaction volumes, the difficulty of risk management for mortgage loans has increased.

CEB Bank expects that throughout this year and into next year, the risks of consumer and mortgage loans will still be in a release process, but overall will show a more obvious convergence trend. At the same time, with the successive convening of important meetings such as the 924 National New Conference, the 926 Central Political Bureau Meeting, and the 1012 Financial Meeting, the introduction and implementation of a package of incremental policies provide reason to believe that future economic recovery will achieve steady progress, and the resolution of risks in key areas will make positive progress.

In the next phase, CEB Bank will further improve its risk management system, strengthen asset quality management, and it is expected that future asset quality will remain stable.

Strengthening Weaknesses and Solidifying Strengths in Retail, Core Business Steady Progress

Regarding the development of retail business in the third quarter and future focus points, General Manager of the Retail and Wealth Management Department Wu Nina stated that in the first three quarters, CEB Bank optimized and executed its overall retail plan, actively serving the real economy and social livelihood, continuously deepening customer management, accelerating digital construction, consolidating business foundations, increasing risk disposal efforts, and continuously improving the quality and efficiency of financial services, maintaining a stable development trend.

First, steady and systematic customer management.

Firstly, continue to strengthen public-private collaboration to expand customer acquisition. Using payroll services as a breakthrough to enlarge source customers, the transaction volume of payroll services in the first three quarters increased by 5.4% year-on-year; relying on online channels to increase coverage of elderly customers, personal pension accounts exceeded 1.2 million, an increase of 96.8%; leveraging unique scenario advantages, the number of users directly linked to cloud payment exceeded 200 million, with payment services exceeding 2.4 billion times, a year-on-year increase of 17%, continuously maintaining industry-leading advantages. Key scenarios such as logistics and housing security added over 1.13 million new customers.

Secondly, strengthen collaborative management to enhance customer stickiness. Adhering to a customer-centric management philosophy, strengthen customer management collaboration, and various combinations have been sorted out in asset business, funding business, product sales, and transaction settlement, such as the dual card CP of debit and credit cards, with the average daily scale of customer demand deposits increasing by 28.5%; enhancing multi-channel quick payment one-click card binding, with the average daily scale of active customer settlement funds increasing by 14.6% year-on-year.

Thirdly, deepen customer segmentation and grouping management. After years of practice, the customer segmentation and grouping management model has become increasingly mature. Relying on online intensive management, the AUM of long-tail and basic customers has increased by 23.3% compared to the beginning of the year Continuously build the wealth management team, improve the investment research and advisory system, and continuously enhance the operational capabilities for private clients, with a 4.8% growth in wealth clients and an 8.3% growth in private banking clients, while the quality of clients continues to improve. At the same time, the "Sunshine +" customer membership rights system was launched in May, serving 5.75 million retail customers, creating a tiered customer matrix growth system that effectively enhances customer loyalty.

Secondly, accumulate capabilities and enhance management through digitalization. Adhering to a digital approach in customer management, a series of tools and platforms have been developed this year to summarize, solidify, and promote the strategies for systematic customer management. By leveraging digital insights into customer needs, over 300 marketing models have been built, and 32 digital toolkits across 6 categories have been incubated in areas such as customer service, product marketing, and management empowerment, allowing branches to quickly reuse and flexibly assemble them, achieving localized transformation and marketing outreach in as little as 3 days. At the same time, the branch digital capability project has been advanced, forming a digital task force that significantly enhances the digital operational capabilities of the branches.

Thirdly, strengthen weaknesses and solidify strengths, with core business making steady progress. Supported by systematic customer management and enhanced digital capabilities, core business has made steady progress. The Polaris indicator AUM reached 29.2 trillion yuan, an increase of 7.0%. Retail deposits have consistently focused on "both quantity and price," with an average daily scale increase of 6.1%, and deposit costs improved by 16 basis points compared to the beginning of the year, significantly better than the industry average. Retail loans have proactively adjusted product strategies and promoted an integrated operational model, with an overall scale steadily increasing to 1.1 trillion yuan. Retail inclusive loans accelerated their issuance, increasing by 31.9 billion yuan year-on-year, a growth rate of 11.4%, ranking among the top in the joint-stock industry; the credit card mechanism reform has been initiated, promoting two returns (returning to the essence of consumption and returning to the branches), with structural adjustments yielding results, as of the end of September, the proportion of new customer agreements reached 83.0%, an increase of 13.8% year-on-year. Strengthening proactive risk management, optimizing approval and credit policies, promoting the reduction of high-risk assets, and increasing collection and disposal efforts, asset quality remains stable.

In the next phase, we will consolidate the achievements of previous operations, focusing on development as the main line, problem-oriented, and using the "Five Major Articles" as a grasp, with a focus on adjusting the structure of retail loan issuance, transforming credit card development, collaborative customer management, enhancing product competitiveness, digital empowerment, risk control, and autonomous collection capabilities, increasing the intensity of mechanism and system reforms, and continuously stimulating new momentum for high-quality retail development.

Technology Empowering High-Quality Business Development

Regarding the new measures your bank has launched in technology-enabled business since the second half of the year, Board Secretary Zhang Xuyang introduced that in the second half of 2024, CEB Bank will continue to promote the implementation of digital transformation planning and technology strategic planning, efficiently empowering high-quality business development, supporting and ensuring the bank's execution of the "Five Major Articles."

First, continuously enhance the online and intelligent service capabilities and levels of customer service, and promote effective customer management and operations.

In terms of retail business, establish a closed-loop retail online loan strategy agile iteration mechanism, focusing on optimizing and upgrading the model strategy system, continuously improving customer reach, conversion rates, and customer stickiness. The model strategy has facilitated an increase of over 100 billion yuan in AUM from long-tail customer groups, an increase of 21.5 billion yuan in AUM from basic customer groups, and nearly 7 billion yuan in sales of private banking agency products Secondly, in terms of the company's business, actively expand the online supply chain finance business, achieving automated approval for commercial bill endorsements, forfaiting, guarantees, and other services; reshape the online product spectrum for inclusive finance, build a full-process intelligent risk control system, and comprehensively enhance the online scalable service level for credit, collateral, guarantee, and technology finance inclusive products. Among them, the "Specialized and Innovative Enterprise Loan," which features full-process online automated approval, has cumulatively disbursed over 18 billion yuan.

Secondly, continuously enhance the automation and intelligence capabilities of internal management, promoting improvements in employee business operations and product management quality and efficiency.

Firstly, continuously expand the breadth and depth of RPA platform applications, covering 12 areas including regulatory reporting, customer service, and inclusive finance, with over 1,100 RPA-related scenarios implemented, replacing 1,120 person-years of manual work.

Secondly, through the construction of automated reports such as "Institutional Operational Profile" and "Single Legal Entity Customer Intelligent Health Check Report," innovate data delivery formats and improve data delivery efficiency. Thirdly, establish an online management process for generating, handling, and applying early warning information, implement full-process control over credit, and cumulatively reduce the credit exposure balance for normal clients on the public early warning black and gray lists by over 60 billion yuan