From the perspective of inclusive finance, state-owned major banks have continued to lower the average interest rate of inclusive loans for small and micro enterprises this year, while the loan balance has grown rapidly since the beginning of the year. Shareholding banks and city commercial banks are competing for customers based on service quality.
On November 4, Cailian Press (Reporter Cao Yunyi) noticed that multiple banks disclosed the progress and effectiveness of the five major articles in the third quarter report, one year after they were proposed. Looking at the inclusive micro-credit, state-owned large banks continued to reduce the average interest rate of loans to inclusive small and micro enterprises this year, while the loan balance grew rapidly compared to the beginning of the year. Against the backdrop of large banks attracting customers, how can joint-stock banks and city commercial banks accelerate?
Several bank officials told Cailian Press reporters that there has been some customer loss in the existing micro-loan customer base, mainly due to interest rates. However, by broadening the demand by expanding the supply chain to upstream and downstream companies and entering micro-enterprise parks, inclusive micro-credit can still achieve positive growth, having already completed 90% of its target.
Six major banks are boosting inclusive finance, and several banks in the Yangtze River Delta region have seen double-digit growth in inclusive finance loans year-on-year.
Under continuous competition and efforts, Cailian Press reporters learned from multiple banks that the sustained growth of inclusive finance is driven by tapping into enterprise demands, with the specific approach of expanding the supply chain to upstream and downstream companies while entering micro-enterprise parks.
"After large banks lower their interest rates significantly, it is difficult to compete with them, and some high-end customers are basically locked by large banks. Therefore, mid-end customers are the target for all banks to grab. During the intense competition, we set an annual attrition rate of 15%-20% for existing inclusive micro-customers, but there are also new users coming in from other banks, eventually achieving overall growth." A comprehensive credit manager at a joint-stock bank told Cailian Press reporters.
According to the third-quarter data of the six major banks, in terms of loan structure, they are directing more credit resources towards key areas such as green initiatives, inclusive finance, manufacturing, and strategic emerging industries. Among them, Agricultural Bank of China's balance in the field of inclusive finance loans (People's Bank of China's calibre) is 4.59 trillion yuan, with annual increment breaking through one trillion yuan, remaining at the forefront in terms of balance and increment compared to peers. China Construction Bank has a large number of inclusive finance loan customers, with 3.37 million customers, an increase of 0.195 million from the end of the previous year; the balance of inclusive finance loans is 3.29 trillion yuan, an increase of 48.461 billion from the end of the previous year.
In addition, Bank of China also experienced fast growth in inclusive loans, with an increase of 23.23% in the balance of loans to inclusive small and micro enterprises since the beginning of the year, with approximately 1.4 million loan customers. Postal Savings Bank of China has an inclusive loan balance of 1.58 trillion yuan for inclusive small and micro enterprises, accounting for over 18% of the total customer loan amounts.
In terms of interest rates, among the six major banks, Bank of Communications has the lowest interest rate for inclusive small and micro-enterprise loans, with an average interest rate of 3.32%, a decrease of 11 basis points from the end of the previous year. Bank of China issued new inclusive small and micro-enterprise loans at an average interest rate of 3.33% in the current year.
"The main reason for the loss of customers in small and micro-loans is the interest rate. From our practical experience, there are two effective ways to expand the customer base, one is to expand the upstream and downstream enterprises of the supply chain; the other is to enter the small and micro-enterprise parks and excavate the loan needs of park enterprises," said the inclusive manager of a joint-stock bank in Zhejiang to the reporter of Caijing.
The aforementioned inclusive manager told the reporter of Caijing that the customer bases of joint-stock banks and city commercial banks in inclusive small and micro-business overlap to some extent, and they need to compete for customers with better service quality and more favorable interest rates. "This year, the growth rate of inclusive small and micro loans is set at around 20%, and 90% of the target has been achieved.
Against the backdrop of the banks' efforts, the year-on-year loan balances of inclusive finance in the Yangtze River Delta region's joint-stock banks and city commercial banks have also grown by double digits. The third quarter report of Bank of Shanghai shows that as of January-September 2024, the inclusive loan disbursement amount was 156.873 billion yuan, a year-on-year increase of 34.56%; the balance at the end of September 2024 was 163.044 billion yuan, an increase of 11.48% compared to the end of the previous year.
The third quarter report of Bank of Nanjing shows that the bank's inclusive financial loans have increased by nearly 12% compared to the end of the previous year, focusing on promoting the quality and expansion of small and micro inclusive business with a digital inclusive financial model and standardized development strategy. The total number of "Xine Xiao Wei" customers reached has grown by 14% from the full year of 2023; vigorously promoting financial support for rural revitalization, with agricultural loans increasing by 20% compared to the end of the previous year.
As of the end of September, the balance of inclusive small and micro enterprise loans of Zheshang Bank was 332.903 billion yuan, an increase of 12.776 billion yuan from the beginning of the year; with a loan account number of 0.1479 million households, an increase of 0.0081 million households from the beginning of the year. Among them, the balance of inclusive small and micro enterprise loans in Zhejiang Province reached 135.65 billion yuan, an increase of 5.671 billion yuan since the beginning of the year. Increasing the supply of medium and long-term credit for small and micro manufacturing enterprises, as of the end of September, the balance of small and micro park business exceeded 64 billion yuan, an increase of 13.293 billion yuan since the beginning of the year. Up to now, more than 600,000 small and micro enterprises have been served, with a total of over 2 trillion yuan in inclusive loans granted.
Financial institutions enrich the agricultural financial product system.
It is worth noting that due to characteristics such as lack of fixed assets and long receivable cycles, agricultural customers in inclusive finance often encounter many difficulties in bank loans. However, from the bank's third-quarter reports, agricultural loans have also shown significant growth.
Among the six major banks, Agricultural Bank of China and Bank of China both saw double-digit growth in agricultural loans year-on-year. The county-level loans of Agricultural Bank of China are a key business for the bank. The balance of agricultural loans in China exceeds 2.3 trillion yuan, with an 18.68% increase from the beginning of the year. Agricultural Bank of China has increased its efforts in lending to rural households, primarily with the 'Rural e-Loan' product, with the balance of the 'Rural e-Loan' product reaching 1.47 trillion yuan, a growth rate of 35.5%. Loans related to ensuring the supply of grains and important agricultural products reached a balance of 1.04 trillion yuan, an increase of 192.4 billion yuan, with a growth rate of 22.8%. The balance of county-level loans is 9.73 trillion yuan, accounting for over 40% of domestic loans; county-level loans increased by 956.3 billion yuan, with a growth rate of 10.9%, 1.73 percentage points higher than the overall average.
Several joint-stock banks and city commercial banks did not disclose their growth rates but have announced the balance of agricultural loans at the end of the third quarter. Among joint-stock banks, Minsheng Bank had a balance of 37.467 billion yuan for inclusive agricultural loans in the first three quarters, an increase of 11.548 billion yuan from the end of the previous year; as of the end of September, Shanghai Rural Commercial Bank had a balance of 66.949 billion yuan in agricultural loans, with an inclusive agricultural loan balance of 15.036 billion yuan.
"In agricultural production, land for construction cannot be approved, and when banks verify assets, this part is nearly zero. In addition, agricultural equipment investment requires independent design and renovation, but the renovation costs and investments are difficult to include in the bank's capital calculation. These are the pain points our company encountered during the loan process," said Zhao Fengliang, General Manager of Zhejiang Caiweiju Agricultural Development Co., Ltd., to a Caixin reporter.
Furthermore, Zhao Fengliang stated that agricultural enterprises may face challenges in terms of longer receivable cycles, clearing funds for farmers and raw materials, and other pressures. To expand production, they rely on financial support from banks. "Jinyin dried vegetables market in Jinyun has broad prospects, but the automation level of this industry has been low in the past, and the level of standardized construction needs improvement. Factory construction, equipment research and purchase, construction of food safety testing laboratories, and other areas all require a significant amount of funds. As a newly established agricultural development company, we are faced with challenges such as long production cycles and various funding issues."
Bankers told Caixin reporters that the capital needs of different agricultural customers vary. For example, the capital needs of agricultural material companies mainly involve extending credit to farmers and stocking up on goods. Agricultural material companies provide assistance in the agricultural production process, with some farmers needing credit and funds to purchase goods in stock.
"We understand the needs of customers, so we have tailored personalized financial products called 'Haoxi Loan' specifically for individual operators and small and micro-enterprises engaged in planting, breeding, trade, and auxiliary agricultural products within Jinyun County. Based on the actual operation of Caiweiju, a credit line of 2 million yuan was granted to 'Haoxi Loan.'" Cai Zhenzhen, Deputy General Manager of Jinyun Branch of China Zheshang Bank, told a Caixin reporter that as of now, it has benefited 66 customers with a credit amount of 21.09 million yuan.
Outstanding growth rate of technology financial loans, with bank crediting boosting technology enterprises.
In terms of regions, the loan distribution for technology in the Yangtze River Delta region is higher than the growth rate of various loans.
The data for the first three quarters of the Jiangsu Branch of the People's Bank of China shows that the proportion of bank credit in the increment of social financing scale continues to rise. Looking at the credit structure, the intensity of financial services as a new productive force also continues to increase. By industry, the balance of loans for scientific research and technical services industry has the highest growth rate, with a year-on-year increase of 44.0%, which is 33.0 percentage points higher than the growth rate of various loans during the same period.
The financial data for the first three quarters of Zhejiang Province shows that the balance of loans for technology-based service industry in the province reached 2,769.068 billion yuan, with a year-on-year growth of 19.2%, which is 9.3 percentage points higher than the growth rate of various loans.
Looking at the third quarter reports of banks in the Yangtze River Delta region, technology finance is one of the main focus areas for each bank. The third-quarter report of Bank of Shanghai shows that the bank's main focus is on scientific and innovative finance, with a total of 177.225 billion yuan in loans to technology-based enterprises from January to September 2024, a year-on-year increase of 35.24%; the balance at the end of September 2024 was 158.354 billion yuan, an increase of 12.85% compared to the end of the previous year.
In their third-quarter reports, Shanghai Pudong Development Bank also highlighted the effectiveness of their efforts, serving over 670,000 technology-based enterprises by the end of the reporting period, with a technology finance loan balance exceeding 570 billion yuan. Bank of Nanjing's technology finance loans increased by nearly 29% compared to the end of the previous year, serving over 700,000 technology innovation enterprises, providing nearly 700 billion yuan in funding support. By the end of the reporting period, Bank of Suzhou had over 12,000 cooperative technology innovative enterprise clients, with a total credit amount exceeding 120 billion yuan.
"The main difficulties in financing for technology innovation enterprises lie in the lack of collateral, often facing technical risks, and many market uncertainties. Financial institutions find it difficult to assess the risks of technology innovation enterprises, and at the same time, they often fail to keep up with the development speed of enterprise demands in terms of product innovation." Zhao Jia, Chairman of Lishui Longjiang Industrial Platform Operation Company, stated.
Taking Zhejiang Wangrong Semiconductor Co., Ltd. as an example, as a technology innovation enterprise with very high total investment, the first phase of the semiconductor project had a total investment of 2.38 billion yuan, with a financing demand from banks of 1.4 billion yuan. However, local financial institutions have limited exposure to the semiconductor industry projects and inadequate research, leading to relatively weak loan support for the projects.
As a landmark project in the Lishui semiconductor industry, the project is expected to have an annual output value of 6 billion yuan upon reaching full production. A person from China Zheshang Bank informed Caijing that through project research, credit application, comprehensive scoring, opening a green approval channel, and other methods, they provided 50 million yuan to the company, with the loan funds specifically used for production line testing and acceptance, and the purchase of supporting facilities.
"The semiconductor industry has a long cycle, with varying financing needs at each stage. In the initial stage, banks and the government are still in the process of understanding semiconductor enterprises, and the initial financing needs of enterprises may not be completely met. As banks increase their interactions with enterprises, the company's prospects are becoming clearer, and we hope that banks will continue to provide long-term support to the enterprises in the future." Zhao Jia stated.
