Core Viewpoint - The banking industry is facing increased regulatory scrutiny regarding the issue of inflated deposit and loan figures, with at least 16 banks penalized for such violations in the first two months of 2026, indicating a shift in the traditional growth model reliant on scale expansion [3][6][15]. Regulatory Actions - Regulatory penalties for inflated deposit and loan figures have become a significant reason for bank sanctions in 2026, with notable fines imposed on various banks, including Hengfeng Bank and Guangxi Beibu Gulf Bank, for multiple violations [5][6]. - The trend of "double penalties" is becoming common, where both institutions and responsible personnel face consequences, including lifetime bans from the banking industry in severe cases [3][5]. Common Practices - Common practices contributing to inflated figures include "loan-to-deposit" schemes and "pledged loans against deposits," which create a cycle of funds within the banking system without benefiting the real economy [7][8]. - Regulatory bodies are increasingly focusing on internal governance mechanisms within banks, highlighting issues such as the establishment of improper deposit assessment indicators [7]. Industry Pressures - The recurring issue of inflated deposits and loans is closely linked to the current operating environment of banks, particularly during the "opening red" period at the beginning of the year, where banks aim to boost deposit and loan figures [9][10]. - The profitability of banks is under pressure, with net profits for various types of banks showing declines, particularly among city commercial banks and rural commercial banks [9][10]. Shift in Business Model - The traditional scale-driven growth model is facing adjustments due to narrowing net interest margins, weak credit demand, and intensified deposit competition [13][15]. - Industry experts suggest a transition from a "scale-oriented" approach to a "customer asset management-oriented" model, emphasizing the need for performance assessment mechanisms that reduce reliance on end-of-period scale metrics [15]. Changes in Liability Structure - The phenomenon of "deposit migration" is affecting the banking industry's operating model, as residents increasingly shift funds from bank deposits to non-bank financial products [11][12]. - The changing liability structure presents new challenges for banks, as non-bank deposits are more sensitive to market rates and risk sentiments, necessitating improved liquidity management [12]. Future Directions - To maintain growth, banks must accelerate their transition towards "wealth management" strategies, leveraging financial products to stabilize liability sources and enhance medium to long-term profitability [15].