As the "second growth curve", the wealth management business segment has become a "delicacy" that the banking industry has competed for in recent years.
However, with the end of the transition period and the official implementation of the new asset management regulations in 2022 and the establishment of the Asset Management Department of the State Financial Supervision and Administration ("FSRC") for the first time in 2023, the wealth management business is facing increasingly stringent supervision. At the same time, the phenomenon of high-quality "asset shortage" caused by the market downturn has not improved.
What are the characteristics of wealth management in the banking industry in this context? Which banks are outperforming? What internal skills have you cultivated? And which banks are lagging behind? What's the sticking point?
In response to the changing market and regulatory trends, the Southern Weekend New Finance Research Center has significantly optimized the evaluation system of the 2023 Wealth Management Rankings, and based on the data of the 2022 and 2023 annual reports, it has calculated and ranked 43 banks (including 42 listed banks and Guangdong Development Bank, one of the systemically important banks). After 4 months, the preliminary list of "2024 Gold Benchmark - Wealth Management List" was produced, so as to seek an objective basis for the aforementioned questions, in order to become a mirror of the industry.
Starting in September, the Southern Weekly New Finance Research Center will add or replace the 2024 interim report data to update the scores of relevant indicators, and will conduct in-depth questionnaire surveys, on-site visits and online surveys of the banks evaluated. At the same time, an independent expert jury of senior experts in related fields will be selected for independent scoring. On the basis of the above three categories of scores, each of which has a certain weight, the "2024 Gold Benchmark - Wealth Management List" will be produced and announced.
The Wealth Management List is one of the eight sub-lists of the "Gold Benchmark - China's New Financial Competitiveness List" (hereinafter referred to as the "Gold Benchmark" is about to emerge in September). In 2023, the Southern Weekend New Finance Research Center released the 2023 "Gold Benchmark" list in December after nine months of rigorous processes such as building an evaluation index system for the list, collecting verification data, calculating rankings, conducting in-depth research and expert review. Objectivity, science, impartiality and transparency are the four principles that the "Gold Benchmark" strictly follows.
22 sub-indicators in four dimensions: New regulatory inverse indicators
The scope of the 2024 Wealth Management List has been significantly expanded, from 20 systemically important banks in 2023 to 43, including 42 listed banks and Guangdong Development Bank, which is not yet listed but is a systemically important bank.
On this basis, the 2024 Wealth Management List retains a number of evaluation indicators of the 2023 index system in the fields of retail business, wealth management subsidiaries and private banking, and follows the continuity of the elements of the evaluation index system.
However, in response to the changing market and regulatory orientations, the Southern Weekly New Finance Research Center has greatly optimized and adjusted the evaluation system of the 2023 Wealth Management Rankings. Different from the evaluation index system of the 2023 wealth management list, the evaluation index system adds indicators such as "proportion of demand deposits", "personal deposits/retail AUM (total financial assets)", "whether it has obtained a wealth management license", and assigns a certain proportion of score weights, so as to conduct an in-depth analysis of banks' wealth management and asset allocation capabilities, and then obtain a more objective and fair evaluation.
As one of the original businesses of wealth management for financial institutions, the family trust business has been frequently encouraged by regulators in recent years, and the Southern Weekend New Finance Research Center has also included this item in the list evaluation system. At the same time, the strong regulatory environment of "long teeth and thorns" that the banking industry has clearly felt is also presented in the form of reverse indicators in the evaluation index system of this list. In this way, the wealth management subsidiaries of banks are encouraged to obtain profits by operating in an upright and compliant manner, rather than fishing in troubled waters by means of speculation in product transaction structure or pricing methods.
In order to smooth out the obvious industry differentiation caused by the scale effect, the Southern Weekly New Finance Research Center has qualitatively set indicators that reflect the growth rate of retail and private banking business, so as to motivate relatively small but growing banking institutions, and thus increase the fairness of the list. In addition, considering that the survival environment of the industry has been difficult due to the volatility of the capital market in recent years, we have examined the growth rate of three indicators, including wealth management fees, the scale and profit of wealth management subsidiaries, in a qualitative manner, and affirmed the institutions that have recorded positive growth in related business areas in a cramped environment.
After optimization and adjustment, the evaluation index system of the 2024 Wealth Management List is finally set into four dimensions: "retail business", "wealth management subsidiary", "private banking" and "regulatory evaluation" and their corresponding 22 sub-indicators, and is given different weights. Among them, the basic retail business, which reflects the fundamentals of wealth management, is still given a greater weight. In contrast, the wealth management subsidiary business with a high entry threshold and the private banking business, which highlights the "spire" of the bank's asset management capabilities, account for a relatively small proportion. This represents the research and judgment of the Southern Weekly New Finance Research Center on the domestic wealth management market: although it has been developed for 20 years, it is still in the early stage of development, and there is more room for development in the wealth management business, which covers the wealth management business and uses it as an advanced stage. In the future, with the changes in the market, the evaluation index system of the wealth management list will be adjusted accordingly.
(Southern Weekly New Finance Research Center has the final right to interpret the scoring rules)
ICBC picks the oiran
According to the evaluation index system of the above list, the New Finance Research Center of Southern Weekend has verified and ranked more than 1,000 indicators of 43 banks. ICBC eventually won the Oiran.
At the same time, five state-owned banks, including the Agricultural Bank of China, China Construction Bank, Bank of China and Postal Savings Bank, made it into the top 10 on the list, highlighting the wealth creation effect of the wealth management market. Five joint-stock banks, including China Merchants Bank, Industrial Bank, Ping An Bank, Shanghai Pudong Development Bank and China CITIC Bank, made it to the top 10. Among them, China Merchants Bank and Industrial Bank ranked third and fifth respectively.
How did they make it into the top 10? Based on the scores of the above 10 banks in various indicators, the Southern Weekly New Finance Research Center selected two representative state-owned banks and two joint-stock banks to conduct case studies in an attempt to find the "secret to high scores".
The state-owned banks, ICBC and CCB, are more representative. The Southern Weekend New Finance Research Center found that ICBC received a full score in the corresponding examination score among a number of scores that reflect the total assets of retail customers, the total assets of private banking customers, and the number of private banking customers. At the same time, ICBC Wealth Management, a wealth management subsidiary of ICBC Holdings, also achieved positive net profit growth in 2023, becoming the only bank among the six major banks to receive this score together with Bank of Communications. In addition, ICBC's 2023 annual report also disclosed in detail the family trust business it carried out, and obtained the corresponding scores. It can be seen that ICBC's first place this time is not only because of its scale advantage, but also because of its deep cultivation in the field of private banking and wealth management business.
CCB ranked fourth. Its score is similar to that of several other state-owned banks in a series of indicators that reflect scale, but it has achieved positive growth in wealth management fee growth, and it is also the only bank among the six major banks to receive this score. This shows that the bank has performed well in the field of intermediary business. However, due to the huge fines received by CCB Wealth Management, which it holds, it has received huge fines for two consecutive years, so it has been deducted points accordingly in the regulatory dimension, and the total score has been affected.
Industrial Bank has become a dark horse
In the echelon of joint-stock banks, China Merchants Bank and Industrial Bank were selected as representative cases for analysis.
China Merchants Bank, which has a retail banking business card, ranked third this time, second only to ICBC and Agricultural Bank of China.
In 2023, CMB received full marks in six indicators, including wealth management fees, profits of wealth management subsidiaries, wealth management scale of wealth management subsidiaries, personal deposits/retail AUM and demand deposit ratio, demonstrating the excellent business structure and profit path of established retail banks. However, the 2023 annual report did not disclose the total assets of private banking customers, and considering its leading position in the private banking business, the Southern Weekend New Finance Research Center also referred to its 2023 semi-annual report data in this data collection process, and its value is still significantly higher than that of the other 42 banks. Based on this, it is given a score that is tied for the first place with ICBC in this item.
Industrial Bank, which ranked fifth on the list, showed strong growth and showed a significant "dark horse trend", and was the only bank among the 43 banks with two growth rates exceeding the average in terms of retail AUM and retail customers (among them, retail AUM was 42%, ranking first in terms of growth rate). Among the top 10 on the list, IB Wealth Management, which is controlled by it, is also one of the three companies that have achieved positive growth in wealth management scale. In addition, IB's wealth management fee income in 2023 will increase positively year-on-year, and the value of personal deposits/retail AUM reflecting the AUM structure will be 28.39%, which is close to that of China Merchants Bank, which has the highest score in this category.
At the same time, its 2023 annual report also discloses in detail the business of the bank's family trust, and the business scale ranks first among the eight banks that have disclosed relevant data, showing the linkage advantage with the group's subsidiary, Industrial Trust.
Ping An Bank, Shanghai Pudong Development Bank and China CITIC Bank ranked eighth, ninth and tenth, respectively. These three banks showed advantages in the evaluation items of wealth management fees, personal deposits/retail AUM, and family trust disclosure.
Among the top 20, city commercial banks accounted for 5 seats
Five city commercial banks also appeared in the top 20 on the list.
The rankings are Bank of Ningbo, Bank of Beijing, Bank of Qingdao, Bank of Hangzhou and Bank of Nanjing. Among them, Bank of Ningbo outperformed its peers in terms of the number of private banking customers and the growth rate of asset scale. Ningyin Wealth Management, which is controlled by it, will achieve positive growth in the scale of wealth management in 2023 and obtain full marks in the corresponding evaluation scale. At the same time, the personal deposit/AUM value reflecting its asset structure was 41.9%, which was also the best performance in the city commercial bank sequence, so it obtained a higher score. Bank of Ningbo ranked 11th on the list, ranking first in the sequence of city commercial banks, and scoring significantly higher than the other four top 20 city commercial banks.
If you look at the echelons, among the top 10 on the list, state-owned banks and joint-stock banks each account for five seats; Among the top 20, the ratio of seats of state-owned banks, joint-stock banks and urban commercial banks is 6:9:5. In contrast, none of the rural commercial banks made the list, and there are still significant differences in wealth management capabilities from other types of banks.
Among the other 23 banks, China Guangfa Bank, which has a national joint-stock banking license, was not in the top 20 due to its low level of information disclosure in the field of private banking, but it also achieved positive growth in the increase in wealth management fees. Bank of Jiangsu, which ranked first in the sequence of retail AUM in the sequence of city commercial banks, also did not receive corresponding scores in relevant indicators due to information disclosure reasons, so it ranked relatively low. However, Suyin Wealth Management, which it holds, will achieve a positive year-on-year increase in the scale of wealth management products in 2023, showing its advantages in wealth management business; Bank of Shanghai, which also has a wealth management license, also has the problem of insufficient information disclosure.
The industry pattern is clearly differentiated
From the overall score, the scores of 43 banks show a relatively obvious differentiation pattern. According to statistics from the New Finance Research Center of Southern Weekly, among the 43 banks, the difference between the highest and lowest values was more than 60 points.
In the process of calculating the score, the Southern Weekend New Finance Research Center found that 24 of the 43 banks have obtained wealth management subsidiary licenses. In 2023, only 10 of the 24 bank-controlled wealth management subsidiaries will achieve positive growth in wealth management scale, 7 will achieve positive profit growth, and 2 will achieve positive growth in profit and scale in the same period. Among the 43 banks, only 3 private banks exceeded the industry average in terms of the number of customers and assets, and only 2 exceeded the industry average in terms of the number of retail customers and retail AUM. The current situation of the industry under the influence of many factors such as the market can be seen.
Considering that the wealth management business still accounts for only about 15% of the main revenue of domestic banks, and superimposed multiple practical factors such as the market downturn and stricter supervision, only the ranking of the top 25 banks in the wealth management list will be announced this time (see the end of the article for the ranking of the list).
It has been 20 years since CEB launched its first wealth management product in China in 2004, and wealth management, represented by bank wealth management, has played an important role in the steady appreciation of residents' wealth and the expansion of commercial banking business. As of the end of June 2024, the scale of bank wealth management is approaching a historical peak of 30 trillion yuan, and it has become an indispensable force in the field of wealth management with public funds and insurance asset management.
Southern Weekend's New Finance Research Center believes that in the future, the regulatory environment faced by the domestic wealth management market will not be relaxed, and the wealth management sub-license, which symbolizes the entry threshold for wealth management, will become a more scarce resource. At the same time, the domestic wealth management market is still facing the stubborn problems of serious product homogeneity, the overall asset allocation strategy is still relatively simple, and the investment and research capabilities of institutions are weak.
Especially in recent years, in the context of the pressure on non-standard asset investment and the lack of high-yield credit bond assets, the performance benchmark of wealth management products has declined significantly. In this context, banking institutions with traditional advantages should cherish their existing resources and strengthen their own refinement in asset allocation and business development capabilities, so that the wealth management business that does not occupy capital can truly become the "second growth curve" of banks. Small and medium-sized banks that do not perform well in this area can share the cake of the industry by huddling together for heating and complementing each other.
With the changes in the industry landscape, the wealth management list under the "Gold Benchmark" list will pay attention to this by continuously adjusting the index evaluation system.
Chen Yan, researcher of Southern Weekly New Finance Research Center, Zhang Jing, Jin Yahan, Wang Siyuan, Wang Yiquan, assistant researchers
Editor-in-charge: Fengyu