Hangzhou Bank’s 2023 performance briefing will be focused! About credit supply, stable interest margin, technology and finance, asset quality, etc.
On the afternoon of May 15th, () Co., Ltd. (hereinafter referred to as "Hangzhou Bank", stock code: 600926.SH) held a performance briefing for the year 2023 and the first quarter of 2024 through live broadcast on the whole network. Song Jianbin, chairman of Hangzhou Bank, Yu Liming, president, Changqing Li, independent director, Chen Lan, Pan Huafu, Zhang Jingke and Zhang Jianfu, vice presidents, attended the meeting.
At this briefing, Yu Liming said that in 2023, in the face of fierce market competition, Hangzhou Bank took the "2255" strategy as the guide, adhered to customer-centered, striver-oriented, strengthened digital intelligence empowerment, and achieved good business performance, achieving a steady development trend of rising comprehensive strength, remarkable business transformation and strong and solid management foundation.
In 2024, Hangzhou Bank will closely focus on the "2255" strategy, firmly adhere to the principle of quality and strict governance, adhere to the general tone of "striving for progress while maintaining stability", and strive to build a value-added chain and closed-loop management of customers, products, teams, risk control and operation supervision, so as to accelerate the creation of differentiated competitive advantages in market segments.
Next, let’s take a look at the key points of this performance briefing of Hangzhou Bank.
1. Optimize asset allocation and actively respond to the low interest rate environment.
Song Jianbin, chairman of Hangzhou Bank, said that in the face of low interest rate environment, on the one hand, Hangzhou Bank should focus on developing direct financing, supply chain services and digital services to improve the comprehensive income level of political and credit business. On the other hand, efforts will be made to improve the business model of Hangzhou Bank from three aspects: one is to expand the customer base of market segments, especially technology and finance business; The second is to improve risk control ability and expand sinking customers; The third is to enrich service functions, especially to improve non-credit services. In the future, Hangzhou Bank will focus on light capital and transactional business.
2. Regional advantages guarantee credit supply, and stable asset quality helps achieve the benefit goal.
President Yu Liming of Hangzhou Bank analyzed the operating performance of Hangzhou Bank and looked forward to the revenue and profit trend in 2024. He put forward five strategies of "promoting investment, optimizing allocation, reducing costs, expanding income and controlling risks" to ensure that Hangzhou Bank can achieve the growth target of benefit indicators in the new year. President Yu Liming pointed out that despite the double pressures of narrowing net interest margin and rising credit risk, Hangzhou Bank will strive to maintain the growth of operating income, total profit and net profit with a solid foundation and good development prospects.
In terms of credit supply, President Yu Liming said that Hangzhou Bank will take advantage of its outlets in the Yangtze River Delta, Pearl River Delta and other economically better regions to increase credit supply and strive to achieve the annual target of deposit and loan growth exceeding 100 billion. He also mentioned that Hangzhou Bank will optimize its asset allocation, especially in the fields of science and technology finance, credit micro-credit and universal micro-credit, so as to achieve optimal returns under controllable risks.
3. There is still downward pressure on interest margin, and the capital adequacy ratio has improved.
Zhang Jianfu, chief financial officer of Hangzhou Bank, made a comprehensive interpretation of key financial indicators such as credit arrangement, interest spread trend and capital adequacy. Director Zhang Jianfu first introduced three strategies of Hangzhou Bank’s credit lending in 2024: optimizing the lending structure while maintaining the total growth, balancing the quantity, price and risk, and optimizing the pace and regional layout. He pointed out that Hangzhou Bank plans to invest more than 100 billion yuan in credit, focusing on increasing the investment in manufacturing, green finance, science and technology, private enterprises, agriculture-related customers, and at the same time emphasizing the study of sub-sectors of the real economy and the grasp of credit opportunities.
When talking about the trend of interest margin, Director Zhang Jianfu analyzed the market situation of interest margin decline in 2023 and looked forward to the challenge of net interest margin in 2024. He mentioned that despite the pressure brought by the decline of LPR and changes in market supply and demand, Hangzhou Bank will mitigate the impact of the decline in interest margin by strengthening pricing management and asset allocation, and actively responding to market changes. Director Zhang Jianfu also mentioned that stopping manual interest payment will not only help standardize the market competition order, but also help reduce the interest rate of deposits, thus supporting the stability of net interest margin.
Regarding capital, Director Zhang Jianfu said that the improvement of capital adequacy ratio and core tier 1 capital adequacy ratio of Hangzhou Bank in the first quarter of 2024 was not only due to the positive impact of the new capital regulations, but also due to the bank’s initiative to adjust its asset structure and improve its capital endogenous capacity. He emphasized that Hangzhou Bank will improve the efficiency of capital use by optimizing the structure of assets and liabilities, promoting the strategy of light capital and deepening capital management.
4. The mortgage has picked up, and the "paid loan" retail consumer credit products will have new brands.
Vice President Chen Lan of Hangzhou Bank exchanged strategies and risk control measures in retail business with investors and analysts. She emphasized that in the current market environment, Hangzhou Bank has achieved steady growth in retail business through differentiated competition strategies. Vice President Chen Lan said that Hangzhou Bank has implemented the strategy of deep channel cultivation and branch pilot in mortgage business, and optimized the regional distribution structure. In 2023, the total amount of mortgage loans increased significantly, and its market share was improved. In terms of consumer loans, Hangzhou Bank adopted a steady and meticulous strategy of sinking customers, strengthened post-loan management and risk prevention and control through () integration, and effectively guaranteed asset quality. Facing the challenge of retail business, Vice President Chen Lan mentioned that Hangzhou Bank will adhere to the principle of "no risk for development" and enhance its risk prevention and control capabilities through refined management and big data risk control mode. At the same time, Hangzhou Bank will launch exclusive consumer credit products for different customer groups, such as a new brand of "paid loans" for working-class and new citizens, in order to realize the coordinated development of retail credit growth and risk stability.
5. Small and micro loans promote the sinking of customer base and create differentiated competitive advantages.
In the field of small and micro loans, Vice President Chen Lan emphasized the effectiveness of Hangzhou Bank in risk prevention and control, and realized the deep integration of marketing chain, operation chain and risk chain through the support of digital cloud platform. She revealed that by the end of 2023, the non-performing rate of micro-credit remained at a low level, showing the competitive advantage of Hangzhou Bank in the field of micro-credit. In addition, Vice President Chen Lan also mentioned the experience of the Small and Micro Credit Department in the sinking of inclusive finance’s customer base, and emphasized the importance of business planning, industry segmentation and customer base selection. She said that through industry segmentation research and customer visits, Hangzhou Bank can serve the local market more deeply and realize the sustainable development of its business.
6. Science and Technology Innovation Financial Business Model Iteration
Zhang Jingke, Vice President of Hangzhou Bank, said that Hangzhou Bank has successfully cultivated more than 300 listed companies, including 95 science and technology innovation board companies, since it established the Science and Technology Sub-branch in 2009. Vice President Zhang Jingke mentioned that although the links of investment and loan linkage in the current financial supervision system have not been fully completed, Hangzhou Bank is still actively exploring the science and technology financial service model, from the initial cooperation with the government to the cooperation with investment institutions, and then to the current "data+professional drive" model, Hangzhou Bank’s science and technology financial business model has been continuously upgraded and iterated. He emphasized that the core logic of Hangzhou Bank’s profit lies in growing together with customers, and achieved a good profit space through low capital cost, low non-performing rate and replicability of business model. Vice President Zhang Jingke explained that Hangzhou Bank not only established deep customer loyalty through early intervention and service for small and micro science and technology enterprises, but also obtained support in low-cost fund settlement, which supported the bank’s profit through lower capital cost when credit pricing could not exceed the market average. In addition, Vice President Zhang Jingke also mentioned that the risk control of Hangzhou Bank in the field of science and technology finance is in place, and the non-performing rate has remained at a low level for 15 years, which has provided a solid support for the bank’s profitability. He also emphasized the importance of team and organization building, pointing out that Hangzhou Bank has a professional team of more than 500 people, which has accumulated 15 years of experience.Become the most powerful competitiveness of Hangzhou Bank in the field of science and technology finance. Finally, Vice President Zhang Jingke said that in the face of changes in the market environment, Hangzhou Bank will stick to long-term, grasp its own pace of development, focus on technological innovation customers, and continue to maintain its leading position in the field of science and technology finance through innovation of products and services and optimization of risk control.
7. Asset quality is stable and controllable.
Pan Huafu, vice president of Hangzhou Bank, gave a detailed answer to the risk management problem. He said that the proportion of interest-related loans increased by 0.12 percentage points in the first quarter, mainly because the extension of a real estate project loan led to the downward shift of classification. He stressed that despite the increase in interest-related loans, the overall business structure and the total number of customers remained stable, and the proportion of interest-related loans was still at a low level among listed banks.
On the issue of the rising NPL ratio of real estate loans, Vice President Pan Huafu mentioned that the NPL ratio was mainly due to a project loan default of a real estate enterprise, but he said that the real estate loan risk of Hangzhou Bank was generally controllable, and put forward the concept of "three opposites" to illustrate the advantages of banks in real estate loans: relatively low proportion of real estate loans, relatively good area of real estate loan projects and relatively stable real estate customers as a whole. In other credit risk areas that investors are concerned about, Vice President Pan Huafu also responded one by one.