Shenzhen Banks Diverge in Personal Loan Strategies

Strategic Insights -

Banks in Shenzhen have taken contrasting approaches to personal loan business since the beginning of this year, with some lenders experiencing significant growth while others witnessed a decline. Despite state-owned banks, such as Industrial and Commercial Bank of China (ICBC) and Bank of China, being in stiff competition for mid- and long-term personal loans, they have distinct risk judgments and preference standards. This divergence in strategy is reflected in their respective performances in the first two months of 2009, indicating a nuanced market landscape.

Key Takeaways:

  • ICBC's Shenzhen branch saw a new incremental mid- and long-term personal loan of CNY 2.42 billion in February 2009, exceeding the CNY 849 million and CNY 1.2 billion new incremental loans of Bank of China and China Construction Bank, respectively.
  • Shenzhen Ping An Bank and Hua Xia Bank suffered negative growth in mid- and long-term personal loan outstanding, while China CITIC Bank and Shanghai Pudong Development Bank experienced slight growth.
  • Five banks, including China CITIC Bank and China Everbright Bank, gained no significant growth in mid- and long-term personal loan outstanding.
  • Nearly all banks, except Shenzhen Development Bank and Shenzhen Ping An Bank, have less competitive strategies in boosting short-term personal loans, with only three banks having more than CNY 1 billion short-term personal loan outstanding at the end of 2008.
  • Shenzhen Ping An Bank is the exception in short-term personal loans, with new incremental short-term personal loans amounting to CNY 2.89 billion in the first two months of 2009.

Statistics:

  • As of February 28, 2009, ICBC's Shenzhen branch had a mid- and long-term personal loan outstanding of CNY 45.45 billion, a significant increase from the recorded CNY 43.05 billion at the last yearend.
  • As of May 2008, the Shenzhen branch of Bank of China had a total personal loan outstanding of CNY 41 billion or so.
  • In the first two months of 2009, China Merchants Bank and Shanghai Pudong Development Bank saw a negative growth in short-term personal loans.
  • As at the end of 2008, the Shenzhen branches of China Construction Bank, Bank of China, and China Merchants Bank had more than CNY 1 billion short-term personal loan outstanding.

Sources:

  • SinoCast Daily Business Beat, "Commercial Banks in Shenzhen Take Different Personal Loan Approaches," Mar 19, 2009.