2021 is the first year of China Merchants Bank's big wealth management, the bank handed over a high-quality answer sheet, operating efficiency to a new level, operating income, net profit hit a new high in the past six years, non-performing loan ratio fell below 1% again after seven years. On March 18, China Merchants Bank Co., Ltd. (hereinafter referred to as "CMB") released its 2021 annual financial report, disclosing the above data.
According to the 2021 annual report of CMB, the bank achieved operating income of 331.253 billion yuan in the whole year, an increase of 14.04% year-on-year; and achieved a net profit attributable to the shareholders of the bank of 119.922 billion yuan, an increase of 23.20% year-on-year.
CMB's revenue returned to double-digit growth, and various businesses showed a situation of going hand in hand and blossoming at multiple points. CMB achieved net interest income of 203.919 billion yuan in the whole year, an increase of 10.21% year-on-year; non-interest net income increased at a high level, reaching 127.334 billion yuan, an increase of 20.75% year-on-year. CMB's non-interest income has always been the focus of attention. It is worth noting that for the first time, CMB disclosed a new indicator. In the "President's Speech", Tian Huiyu, President of CMB, revealed that the annual revenue of large wealth management accounted for nearly 16% of revenue, becoming a key minority for CMB to explore new business models.
Big Wealth Management Revenue Up 33.91% Year-on-Year
What exactly does the "big wealth management income" proposed by Tian Huiyu, president of China Merchants Bank, include?
According to the bank, the income of large wealth management is the caliber of the group, including the fee and commission income of wealth management, asset management and custody business. From the 2021 annual report, CMB has adjusted the breakdown of fee and commission income, and the fee and commission income separately lists the indicators such as wealth management, asset management and custody business fee and commission income.
According to the details of the annual report disclosure, CMB's large wealth management income in 2020 was 38.928 billion yuan, and in 2021, it rose sharply by 33.91% year-on-year to 52.130 billion yuan, accounting for about 16% of CMB's net operating income. As a new dimension of observation, its growth potential is the focus of external attention.
Tian Huiyu pointed out at last year's shareholders' meeting that the business model does not have a fixed moat, and if it does not take the initiative to change, yesterday's moat may become tomorrow's "swamp". Building a large wealth management value cycle chain is the main line of work during the "14th Five-Year Plan" period of CMB. In 2021, CMB proposes to become a "connector" that connects both the supply and demand ends, serves the real economy, and helps people achieve a better life. It can be seen from the income structure of large wealth management that CMB should provide rich wealth management products on the retail side on the one hand, and provide diversified solutions to corporate customers on the other hand. This is precisely the thinking behind CMB's proposal to attach importance to AUM (retail management of total customer assets) and FPA (total financing of corporate customers). Wang Jianzhong, vice president of CMB, once made a very intuitive summary, CMB should achieve "customer funds do not have to enter my pocket, as long as they are managed by me" at the capital end, and "customer financing does not have to be funded by me, as long as I serve" on the asset side.
According to the annual report of CMB, in 2021, the total assets (AUM) of retail managed customers exceeded 10 trillion yuan to reach 10.76 trillion yuan, an increase of 20.33% over the end of the previous year; the balance of the company's total customer financing (FPA) was 4.9 trillion yuan, an increase of 691.594 billion yuan over the beginning of the year; the balance of the total scale of asset management business was 4.31 trillion yuan, an increase of 14.92% over the end of the previous year; and the balance of custody assets was 19.46 trillion yuan, an increase of 21.25% over the end of the previous year.
Among the fees and commission income in 2021, wealth management fee and commission income contributed 35.841 billion yuan, an increase of 29% year-on-year; asset management fee and commission income contributed 10.856 billion yuan, an increase of 57.52% year-on-year; and custody business commission income contributed 5.433 billion yuan, an increase of 27.75% year-on-year.
The big wealth management business model started smoothly
The growth potential of CMB's large wealth income should be understood in the context of CMB's exploration of the 3.0 model.
Since 2014, CMB has proposed and implemented the strategic transformation of "light banking". In 2018, the transformation entered the second half, and CMB began to explore the 3.0 model in the digital era. After three years of exploration, in 2021, CMB proposes to create a 3.0 model of "business model of big wealth management + digital operation model + open and integrated organizational model". CMB management believes that the 3.0 model is closest to the ideal "light bank" of CMB. Tian Huiyu proposed in the annual report that the essence of CMB's 3.0 model is to "take the customer as the center and create value for customers", to be closer to customers, to understand the needs of customers better, and to have a broader perspective with professional capabilities. According to the annual report data, the advantages of CMB's customer base have maintained steady growth. By the end of 2021, the number of retail customers reached 173 million, an increase of 9.49% over the end of the previous year. The total number of customers of the company reached 2.3171 million, and 381,600 new accounts were opened. Behind the service capabilities needs scientific and technological capabilities to support. From the annual report of CMB, it can be seen that CMB spends more than 10 billion yuan on information technology investment every year to continue to build a financial technology bank. In 2021, the bank invested 13.291 billion yuan in information technology, an increase of 11.58% year-on-year.
On the basis of the digital operation model and the open and integrated organizational model, behind the big wealth management business model is a self-change, wealth management from "self-centered product sales" to "customer-centric asset allocation" jump; for public business, it is necessary to start from the logic of enterprise operation, integrate the scattered capabilities of investment banks, commercial banks, private banks, technology, research, etc., and build "investment and private science" integrated services in the customer interface.
Taking wealth management as an example, in 2021, CMB introduced 8 high-quality products from wealth management subsidiaries of friendly banks into the retail product system, redefining the industry ecology and competition logic; upgrading the "Zhao Cai" wealth open platform, introducing a total of 87 asset management institutions, and providing 140 million wealth information services for 9.5129 million retail customers. Wholesale finance establishes a circle of friends of brokers, funds, PE and other institutions. At the same time, through business integration and strengthening linkage with group companies, CMB has woven richer ecological scenarios for customers. The wholesale line is CMB Wealth Management's recommended bond assets of 198.397 billion yuan, and the subsidiaries contributed a total of 2.48 trillion yuan of AUM and 780.445 billion yuan of FPA to the parent bank. It can be seen that CMB's large wealth management business model has started smoothly.
The advantage of low-cost debt is consolidated
As a bank, interest income is also an indicator that needs attention. From the annual report, the net interest yield of CMB remained stable, at 2.48% in 2021, down only 1 basis point year-on-year. CMB said that through the continuous optimization of the asset-liability structure and the decline in the cost of liabilities, it has made up for the impact of the decline in loan yield to a certain extent.
CMB's retail business continues to contribute low-cost deposits. The average daily balance of retail customers' demand deposits accounted for 69.51% of the average daily balance of retail customers' deposits, an increase of 3.66 percentage points year-on-year. In order to capture the young customer base, CMB launched the one-cent change wealth management service "Chaochaobao" in 2021 to open up the daily payment and wealth management value-added needs of customers. According to the data, the number of customers who purchased "Chaochaobao" products reached 15.403 million, and the balance of customer positions at the end of the period was 135.442 billion yuan.
Credit resources for public business are relatively tight, but in 2021, they have contributed a lot of low-cost deposits. According to the calculation of CMB's annual report, CMB's public loans accounted for about 35.84% of total loans, but contributed 64.53% and 4.05 trillion yuan of deposits to the total deposits. Among them, the proportion of CMB's demand for public deposits is high, and the proportion of demand in the average daily balance is 62.29%, an increase of 4.89 percentage points over the previous year. The average cost ratio was 1.62%, down 13 basis points from the previous year.
The annual report also shows that in 2021, CMB will actively respond to the national policy orientation, mainly strengthening financial support and investment in the fields of high-quality manufacturing, green economy, and strategic emerging industries. Among them, the balance of manufacturing loans was 320.060 billion yuan, an increase of 45.380 billion yuan over the end of the previous year, accounting for 17.00% of the company's total loans; the balance of green loans was 263.842 billion yuan, an increase of 55.254 billion yuan from the beginning of the year, accounting for 14.02% of the company's total loans; the balance of strategic emerging industry loans was 219.154 billion yuan, an increase of 47.739 billion yuan over the end of the previous year, accounting for 11.64% of the company's total loans.