Jing Ji Guan Cha Wang·2025-09-24 02:20Core Viewpoint - China Postal Savings Bank (Postal Bank) announced on September 23 its plan to absorb and merge its wholly-owned subsidiary, Postal Huinong Bank, to optimize management and business structure, marking a significant shift in the independent direct banking landscape in China [1] Group 1: Financial Performance of Postal Huinong Bank - Postal Huinong Bank, established with a registered capital of 5 billion RMB, faced continuous losses since its inception, with total assets shrinking from 70.22 billion RMB at the end of 2022 to 120.05 billion RMB by mid-2025 [2][5] - The bank reported a cumulative total loss of 958 million RMB since its establishment, indicating a failure to achieve sustainable profitability despite significant investment [6] - By 2024, the bank's total assets further declined to 128.28 billion RMB, with a net profit loss of 4.15 billion RMB, highlighting severe operational challenges [4] Group 2: Market Dynamics and Competitive Landscape - The absorption of Postal Huinong Bank reflects broader challenges faced by independent direct banks, with only Citic Baixin Bank remaining operational among the initial trio of direct banks [7] - Independent direct banks are under pressure from both their parent banks' mobile banking apps and established internet banks, leading to intense competition and market saturation [8] - The business model of independent direct banks has been criticized for its inability to differentiate from traditional banks, resulting in challenges in customer acquisition and profitability [8] Group 3: Strategic Implications for Postal Bank - The merger is seen as a rational adjustment based on financial returns and strategic effectiveness, signaling a shift in focus from merely establishing new entities to integrating digital capabilities into core operations [9] - Postal Bank aims to internalize the operational experience and technology from Postal Huinong Bank to enhance its overall digital transformation, emphasizing the importance of embedding digital technology into business processes [9] - The future competition in the banking sector will hinge on the ability to effectively integrate digital solutions rather than the number of innovative subsidiaries [9]