Zhong Guo Zheng Quan Bao·2025-08-14 20:16Core Viewpoint - The banking industry is experiencing intense "involution" competition, leading to a decline in profitability and increased credit risks, prompting regulatory bodies to implement measures to promote sustainable and differentiated competition [1][2][4]. Group 1: Involution Competition and Its Impact - Some banks are lowering loan rates, extending loan terms, and relaxing approval conditions to attract customers from competitors, which directly leads to delayed credit risks [1]. - The phenomenon of "involution" is eroding industry profits, particularly squeezing the survival space of small and medium-sized banks due to a lack of product innovation and high homogeneity [1][4]. - Regulatory bodies in regions like Shanghai, Guangdong, and Zhejiang are launching initiatives to combat involution, targeting issues like mortgage rebates and commission payments, urging banks to adopt innovative service models and differentiated competition strategies [1][2]. Group 2: Regulatory Measures and Industry Response - Guangdong's banking sector plans to implement a comprehensive system to address involution, including a negative list for improper competition and self-regulatory measures [2]. - Ningbo's banking association has introduced a self-regulatory convention for personal housing loans, emphasizing fair competition and prohibiting any form of improper competition [2][3]. - The Ningxia Banking Association is conducting extensive research to understand market strategies and challenges, focusing on the issue of commission rebates in the housing loan sector [3]. Group 3: Long-term Implications and Strategic Shifts - The ongoing price competition is causing banks to engage in practices like deposit interest subsidies and loan price wars, disrupting the market order [3][4]. - The internal assessment mechanisms of banks often prioritize short-term growth, leading to a cycle of price wars despite awareness of their detrimental effects on the industry [4][5]. - Banks are encouraged to abandon short-term profit-seeking behaviors and enhance their service quality and product innovation to achieve sustainable development [5][6].