Financial Services Association, April 30 (Reporter Cao Yunyi) The “May Day” holiday is coming soon. Taking advantage of holiday travel opportunities, banks are stepping up efforts to promote consumer loans, etc. Not only have major state-owned banks lowered interest rates, but joint stock banks have also increased their chips to break through the “3” range.

Against the backdrop of relatively weak residents' desire and demand to buy homes, the retail banking business turned to the consumer loan sector to gain strength. Judging from the bank's annual reports, there has been a marked increase in overall personal consumer loans and operating loans.

Industry experts told the Financial Federation reporter that product homogenization is serious, and the bank consumer loan customer base is also constantly sinking, making competition in the industry even more intense. Although the high-yield characteristics of consumer loans are no longer prominent, banks still use consumer loans as a key driving direction for credit investment. In the future, institutions need to increase the acquisition of high-quality customers and focus on expanding the medium- and low-risk customer base.

“May Day” ultra-low interest rates hit, and interest rates for joint stock banks fell below 3

On April 30, a number of banks used “May Day” travel as a starting point to attract consumers to apply for consumer loans. According to the Financial Services Association reporter, interest rates on consumer loans have dropped to between 3% and 3.5%. Major state-owned banks are also raising interest rates, which are not much different from those of urban commercial banks, while joint stock banks have increased their chips and even broken through the “3” range.

Among major state-owned banks, the Guizhou branch of the Bank of China announced a minimum 3.4% discount on the annual interest rate (simple interest) for BOC E-loans. Interest is calculated daily, and the amount is recycled for a maximum period of 12 months. However, the interest rate of the Bank of Communications Huimin Loan is as low as 3.2%, which is not much different from the interest rate of agricultural and commercial banks. For example, Huishang Bank and Guangzhou Agricultural Commercial Bank, which use the “May 1st” season to promote consumer loans, have consumer loan interest rates of 3.2% and 3.28%, respectively.

In joint stock banks, interest rates on personal consumer loans can be even lower. Ping An Bank's “White Collar New Loan” consumer loan product has an annual interest rate (simple interest) of 3.96% to 9.72% for regular customers. After the coupon, the annual interest rate (simple interest) of the product starts as low as 2.88%, and the amount can reach 1 million yuan. The minimum annualized interest rate (simple interest) of China CITIC Bank's “Credit Second Loan” products can be reduced to 2.98%, but customers are required to “flash sale” 40% off interest coupons every Monday to Friday at 10 a.m.

According to an analysis in a research report published by Rong360 Digital Technology Research Institute, the recent downward trend in interest rates on bank online unsecured consumer loans is quite obvious. Although interest rates for most products are still above 3%, the situation where the minimum interest rate is below 3% has begun to increase, and price competition among banks is also becoming more intense.

Huang Dazhi, a researcher at the Star Map Finance Research Institute, pointed out that product homogenization is serious, and the bank consumer loan customer base is also constantly sinking, making competition in the industry even more intense. Combined with the continued decline in interest rates since 2023, the decline in consumer credit interest rates has been exacerbated.

Major state-owned banks have expanded their consumer loans amazingly, and it is the key to seize medium- and low-risk customer groups

Against the backdrop of relatively weak residents' desire and demand to buy homes, the bank's retail business turned to the consumer loan sector. Judging from the bank's annual reports, there has been a marked increase in overall personal consumer loans and operating loans.

It is worth noting that major state-owned banks have also turned their attention to the field of personal consumer loans. The Bank of Communications increased 86.25% year-on-year in 2023, and the increase in consumer loans and operating loans reached a record high. The total amount of personal consumer loans of the Agricultural Bank in 2023 increased by more than 70% year on year, and the personal consumer loans of CCB and ICBC also increased by more than 40% year on year, by 42.71% and 41.23% respectively.

Guosheng Securities pointed out that at present, the high-yield characteristics of consumer loans are not prominent, yet banks still use consumer loans as the key driving direction for credit investment. On the one hand, they are implementing regulatory levels to guide financial institutions to strengthen support in the consumer sector. On the other hand, consumer loans can be used as an effective customer access tool. Although banks have sacrificed loan yields, from a medium- to long-term perspective, they can be used to channel other personal businesses such as wealth management, which helps banks save customer acquisition costs and accumulate high-quality customer bases.

However, the scale of individual loans from joint stock banks, which were originally known for their retail business, has declined, and seizing medium- and low-risk customer groups has become a more important driving direction. With the goal of establishing a retail bank, Ping An Bank's personal loan balance for the first quarter was $1878.130 billion, down 5.0% from the end of the previous year. Among them, the consumer loan balance was $510.720 billion, down 6.3% from the end of the previous year. In response, Ping An Bank explained that it was to adjust the customer base structure, strengthen the acquisition of high-quality customers, and focus on expanding the medium- and low-risk customer base.

Huang Dazhi said that due to the impact of the epidemic, residents' cash flow is generally tight, and the risk of existing customers is gradually being revealed. Under such circumstances, financial institutions need to focus on high-value-added businesses; they must not blindly sink or roll back; they need to adjust the customer base structure to prevent the risks brought about by the downturn in business.