There is a bank. It engages in whatever trend is rocking among Gen Z. An adorable cat mascot, trendy IP co-branded cards with stunning designs, Xianxian, a sweet AF popular content creator... Yes, it is China Merchants Bank (“CMB”), founded in 1987 in Shekou, Shenzhen.
Infusing with the "pioneering spirit" of Shekou genes, China Merchants Bank has always been enthusiastic about "making innovations". Today, this first domestically-founded bank in China has an asset size of 10.67 trillion yuan, ranking 6th among the top 100 banks nationwide, 11th among the global top 1000 banks and 179th among the top 500 companies in the world, just after the "Big Five" state-owned banks.
In a mere 36 years since its foundation, China Merchants Bank has achieved such extraordinary success primarily due to its trump card - the retail business. In recent years, the revenue and profits from its retail division have consistently accounted for over 50%.
In fact, China Merchants Bank's emergence to the "king of retail" was far from smooth. In the 1980s and 1990s, the domestic banking industry was heavily focused on corporate business. How could this newly established commercial bank compete for a share of the corporate market? Thus, it targeted the untapped retail sector, making it a strategic priority. In the years following its initial transformation, China Merchants Bank experienced explosive growth.
However, hit by the 2008 financial crisis, central bank interest rate cuts, as well as cutthroat competition, China Merchants Bank’s momentum halted. And it was forced to change yet again, by cost reduction to gradually recovery in growth.
Currently, affected by global economic slowdown and lower interest rates at home, commercial banks are under tremendous pressure.
In face of the ever-changing macro environment, China Merchants Bank has been continuously adjusting its strategies to stay resilience against risks, maintaining asset quality and keeping the non-performing loan(NPL) ratio below 1%.
The bank also actively works to clear risks related to real estate. In the third quarter this year, its property NPL balance and ratio both edged down quarterly for the first time in 10 months.
Its retail business continues to grow steadily. As of September 2023, China Merchants Bank has over 13 trillion yuan in total assets under management for 194 million retail customers.
Diversifying consumption scenarios and being creative with co-branded products, China Merchants Bank follows the latest trends of Gen Z. Whatever young people are into, it can make it "cool". Although one individual owns only 0.56 credit card on average today, there are over 100 million credit cards in circulation issued by China Merchants Bank.
In addition, it much emphasizes on exploring new opportunities of growth. At the start of 2023, China Merchants Bank proposed a strategic plan for the coordinated development of four major business segments.
Six months after officially transitioning to the "Value Bank" model, it has more than one trillion yuan in public funds under management becoming the first bank to achieve this milestone. From the introduction of groundbreaking products such as "All-purpose Credit Card" and "All-purpose Internet", which had a significant impact on the domestic banking industry to the accumulated revenue of hundreds of billions of yuan, China Merchants Bank’s success hinges on an astute sense of digital transformation.
One often compares it to an internet company not only due to its customer acquisition strategies and business operations, but also its understanding and investment in technology empowerment. China Merchants Bank is the first commercial bank in China to include the ratio of fintech investment in its Articles of association. In recent years, it has set the ambitious goal of becoming the "strongest bank in fintech" with continuous strengthening of information technology infrastructure.
As a benchmark for China’s commercial banks, China Merchants Bank is constantly under the spotlight. What is the future of banking? It may worth looking to the Greater Bay Area, or to Shenzhen, where China Merchants Bank is based. Perhaps it will offer a key to the future.
Source | SFC
