Financial Services Association, April 12 (Reporter Gao Ping) The Bank of Beijing's latest 2023 annual report shows that in 2023, the bank achieved operating income of 66.711 billion yuan, an increase of 0.66% over the previous year; net profit attributable to shareholders of the parent company was 25.624 billion yuan, an increase of 3.49% over the previous year. Regarding the company's performance, today, at the 2023 annual results briefing, Bank of Beijing Governor Yang Shujian said that the Bank of Beijing's revenue and net profit have all continued to grow, which shows that the data is relatively real.

In line with industry trends, Bank of Beijing interest spreads are also showing significant narrowing pressure. The 2023 annual report shows that the Bank of Beijing's net interest spread during the reporting period was 1.54%, down 0.22 percentage points from the previous year. What is the trend of interest spreads this year? What impact will the implementation of the new capital regulations have? Bank of Beijing management responded to hot topics that the market is concerned about at the performance meeting.

Among them, referring to the new capital regulations, Yang Shujian said that the new capital regulations have comprehensively revised the risk-weighted asset measurement rules under the first pillar, enriched the risk assessment framework system under the second pillar, established a differentiated capital supervision system under the third pillar, and raised information disclosure standards. According to the analysis, the impact of the policy on the Bank of Beijing is neutral, and the impact on the capital adequacy ratio is limited.

Talking about the decline in revenue: Foreign branch retail customers will exceed one million in the next 3-5 years

The annual report shows that during the reporting period, the Bank of Beijing achieved net non-interest income of 16.361 billion yuan, an increase of 10.41% over the previous year, accounting for 24.53% of operating income, an increase of 2.17 percentage points over the previous year. It should be noted that among them, the net income from processing fees and commissions of the Bank of Beijing dropped sharply. In 2023, the Bank of Beijing's net revenue from fees and commissions was 3,752 billion yuan, a year-on-year decrease of 46.9%. “Mainly due to a year-on-year decrease in agency and commission fee revenue, and an increase in online business fee expenses.” The Bank of Beijing explained in its annual report.

According to Wind statistics, the Bank of Beijing's net income from fees and commissions is at the top of the decline among the 23 listed banks that have been disclosed so far. Bank of Beijing management also explained the issue of the sharp decline in revenue during the performance meeting. Yang Shujian said that the main reason was the centralized liquidation of financial management products with expected earnings in accordance with regulatory requirements, which led to a reduction of about 2.2 billion yuan in annual product handling fees. This is still quite large. Furthermore, due to the turmoil in the capital market last year, income growth in the wealth category has also been limited; at the same time, due to the policy of lowering insurance premiums, consignment revenue has declined; in addition, it is also necessary to implement requirements for fee reduction and concessions. Overall, it has had a significant impact on revenue collection.

In the next step, Yang Shujian added that the Bank of Beijing wants to increase the development of strong capital business. Of course, on the one hand, strong capital business development requires strong marketing capabilities, and on the other hand, it also needs to launch corresponding products in line with the overall market situation.

Furthermore, in order to strengthen the customer base, whether it is a corporate customer or a retail customer, it is necessary to expand. In terms of retail customers, the Beijing region reached more than 20 million, but of the external branches, only the Jinan branch surpassed 1 million. It is hoped that in the next 3-5 years, all branch retail customers will exceed 1 million, so that processing fee revenue can only be increased after the customer base grows. Furthermore, it is also necessary to strengthen resource coordination.

Referring to the impact of the implementation of the financial asset risk classification method in the second half of last year, Xu Maomao, assistant governor and chief risk officer of the Bank of Beijing, said that the Bank of Beijing implemented the new regulations in all aspects at the level of institutional processes and systems, and minimized the impact on relevant regulatory indicators in accordance with the transition period arrangements. Xu Maomao said that judging from the current policy, the calculation of impairment preparations after the implementation of the new regulations will not have a significant impact on the bank's credit costs.

Looking ahead to the trend of interest spreads: the narrowing of interest spreads will slow down this year

Since 2019, commercial banks' net interest spreads have continued to narrow due to the continued decline in loan interest rates and the trend of regularization and long-term deposits. According to data released by the China Financial Supervisory Authority, the net interest spread of the banking sector in 2023 was 1.69%, falling below 1.7%. Similar to the industry, the Bank of Beijing interest spreads are also showing narrowing pressure.

Regarding interest spreads, Yang Shujian said that the decline in interest spreads is indeed a major trend. Last year, the Bank of Beijing's net interest spread was 1.54%, which is lower than the industry average. In response, Yang Shujian explained that in 2023, due to factors such as business structure and growth maintenance, the decline in return on assets was greater than the reduction in debt costs, which led to a narrowing of bank interest spreads.

Looking ahead to later trends, Yang Shujian pointed out that the narrowing of interest spreads will slow down this year. On the one hand, interest spreads on deposits and loans are resilient. On the other hand, debt costs are also advantageous. The Bank of Beijing's overall debt cost at the end of 2023 was the same as at the beginning of the year; in addition, application transformation will continue to advance.

“The Bank of Beijing will take various measures to slow the rate of decline in interest spreads and keep them within a reasonable range.” Cao Zhuo, secretary of the board of directors and chief financial officer of the Bank of Beijing, added that the debt side continues to consolidate its cost advantage. The first is to increase the promotion of deposit marketing and expand the sources of low-cost deposits. The second is to encourage settlement users and custodians of marketing financial institutions to reduce the cost of interbank debt. The third is to make good use of monetary policy tools and active debt instruments such as small-scale refinancing and carbon emission reduction to continue to reduce debt costs.

Furthermore, the asset side continues to optimize the structure. The first is to adjust and optimize the customer structure, increase the expansion of specialized and new enterprise customers, and actively market customers in new circuit industries such as clean energy, new energy vehicles, and equipment manufacturing. The second is to adjust and optimize the regional structure, increase investment in high-yield loans in the Yangtze River Delta region, and promote the growth of public loans in the Yangtze River Delta region to outperform the market. The third is to adjust and optimize the business structure and increase investment in inclusive loans and self-operated consumer loans.