Core Viewpoint - China Postal Savings Bank announced the absorption and merger of its wholly-owned subsidiary, Postal Savings Bank of China Huinong Bank, to optimize management and business structure, aiming for strategic integration and resource allocation [1] Group 1: Financial Performance of Postal Savings Bank of China Huinong Bank - Since its establishment on January 7, 2022, Huinong Bank has faced continuous losses, with total losses amounting to 9.58 billion RMB since inception [1][2] - By the end of 2022, Huinong Bank reported total assets of 7.022 billion RMB and a net asset of 4.838 billion RMB, with a net profit of -162 million RMB [1] - In 2023, total assets increased to 14.986 billion RMB, but net assets fell to 4.574 billion RMB, with a net profit of -263 million RMB, indicating an expanding loss [1] - The situation worsened in 2024, with total assets dropping to 12.828 billion RMB and a net profit of -415 million RMB [1] - As of mid-2025, total assets were 12.005 billion RMB, with a net profit of -118 million RMB, although losses were reduced by 38.74% year-on-year [1] Group 2: Challenges Faced by Independent Direct Banks - The merger reflects broader challenges faced by independent direct banks, which struggle with customer acquisition and profitability [2] - Independent direct banks are experiencing intense competition from both their parent banks and larger banks, leading to internal conflicts [3] - The high costs associated with technology investment and customer acquisition hinder the ability of independent direct banks to achieve economies of scale [3] - The business model of purely online operations has limitations in serving small and micro enterprises, leading to product homogenization with traditional banks [3] Group 3: Strategic Implications for Postal Savings Bank - The merger is a rational adjustment based on financial returns and strategic effectiveness, signaling a shift in focus towards internal capability development rather than merely establishing new entities [3] - The goal is to integrate Huinong Bank's operational experience and technology into the parent bank to enhance overall digital transformation [3] - The success of digital banking will depend on the internalization and reconstruction of capabilities rather than the mere establishment of new banks [3]

Core Viewpoint - China Postal Savings Bank (Postal Bank) announced the absorption and merger of its wholly-owned subsidiary, Postal Huinong Bank, to optimize management and business structure, marking a significant shift in the independent direct bank landscape in China [1][8] Group 1: Company Overview - Postal Huinong Bank was established with a registered capital of 5 billion RMB, aiming to serve agriculture, small and micro enterprises, and the general public as a digital bank [2] - The bank faced continuous losses since its inception, with total losses amounting to 958 million RMB by 2025, raising concerns about its independent business model [7] Group 2: Financial Performance - By the end of 2022, Postal Huinong Bank had total assets of 7.022 billion RMB and a net asset of 4.838 billion RMB, indicating a loss of 162 million RMB in its first half-year of operation [3] - In 2023, total assets increased to 14.986 billion RMB, but net assets fell to 4.574 billion RMB, with a net loss of 263 million RMB, highlighting the bank's struggle to convert its user base into profitability [4] - By 2024, total assets decreased to 12.828 billion RMB, and net loss expanded to 415 million RMB, indicating severe operational challenges [5] - In the first half of 2025, total assets further declined to 12.005 billion RMB, with a net loss of 118 million RMB, although the loss was reported to have decreased by 38.74% year-on-year [6] Group 3: Industry Context - The merger reflects broader challenges faced by independent direct banks in China, with only one remaining operational, indicating a shift from initial optimism to a reality check [8] - The competitive landscape includes pressure from parent banks' mobile apps and established internet banks, which complicates the independent banks' market positioning [9] - The independent direct banks struggle with high initial costs and a lack of scale, leading to inevitable long-term losses, as evidenced by Postal Huinong Bank's financial trajectory [9] Group 4: Strategic Implications - The merger is seen as a rational adjustment based on financial returns and strategic effectiveness, emphasizing the need for banks to internalize digital capabilities rather than merely establishing new entities [11][12] - The focus for future banking competition will shift towards integrating digital technology into core business processes to enhance efficiency and customer experience [12]

Core 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]