Posted on : March 24, 2017
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Author Jim Stent argues that much criticism of China’s banking system is ill-informed. Stent says that Chinese banks have transformed over the past 15 years into modern entities with high levels of professional competence, and Chinese banks are deeply embedded in a traditional Chinese cultural cognitive framework.
  1. According to The Asian Banker, 43% and 32% of bank outlets in emerging markets and developed markets respectively in the Asia Pacific region cannot make a profit. As for China, the growth rate of overall net profits of China’s banking sector has dropped to single digits. According to data released by the China Banking Regulatory Commission (CBRC), as at the end of Q4 2015, Chinese commercial banks realised a total net profit of RMB 1.59 trillion, representing an increase of only 2.43%.
  2. Slower earnings growth has led to tremendous cost pressures, which have become the main driving force for the banking sector in the Asia Pacific region to promote the transformation of outlets. With a competitive external environment and high operating costs, many outlets are struggling to make a profit. If expenses on redundant staff do not bring in greater profit in return, they will become a burden on banks. The transformation of outlets is the concept most frequently mentioned by Chinese commercial banks as a response to the problem (source: KPMG).