Xin Lang Cai Jing·2025-09-02 01:57Core Viewpoint - The retail banking sector in China is facing significant challenges, with banks like Ping An Bank experiencing a decline in retail business performance due to past strategies that prioritized high-risk, high-reward approaches. The industry is now reflecting on these strategies as they navigate a difficult economic environment [1][2][4]. Retail Banking Performance - In the first half of 2025, major banks reported a decline in retail financial income and profits, with Agricultural Bank of China, China Construction Bank, and Industrial and Commercial Bank of China all showing varying degrees of downturn in personal financial business [5][6][7]. - Ping An Bank's retail banking revenue fell by over 20% year-on-year, with its pre-tax profit dropping to 1.2 billion yuan, contributing only 4% to total profits, down from 7% [8][10]. Asset Quality and Credit Risk - The retail banking sector is under pressure regarding asset quality, with rising non-performing loan ratios impacting profitability. For instance, Ping An Bank's retail loan non-performing rate was 1.27% [13][14]. - The overall economic environment, including a downturn in real estate investment and sluggish consumer demand, has led to a significant reduction in retail business income across the board [12][16]. Wealth Management Transition - Banks are attempting to shift their focus from traditional retail lending to wealth management, which requires long-term strategic investment and organizational capability [16][20]. - Despite the challenges, some banks, like China Merchants Bank, have shown resilience in their wealth management capabilities, with a notable increase in their wealth management income [24]. Future Strategies - Banks are re-evaluating their strategies, emphasizing quality and efficiency over mere scale. For example, China Merchants Bank is focusing on core banking functions while enhancing digital services and AI integration [18][19]. - The shift towards wealth management is seen as essential for banks to maintain competitiveness, especially as deposit trends shift towards investment products [19][22].