Group 1 - Postal Savings Bank of China (PSBC) has received approval from the National Financial Regulatory Administration to absorb and merge its wholly-owned subsidiary, Postal Bank of China Huinong Bank, marking the end of the latter's operations [2][4] - The merger aims to integrate operational experience and optimize resource allocation, effectively reducing management costs and enhancing overall operational efficiency [4] - Postal Bank of China Huinong Bank, established in January 2022 with a registered capital of 5 billion yuan, focused on serving agriculture, small and micro enterprises, and promoting inclusive finance, but struggled to achieve profitability [4] Group 2 - Financial data indicates that Postal Bank of China Huinong Bank's revenue from 2022 to 2024 was 101 million yuan, 355 million yuan, and 243 million yuan, with net losses of 162 million yuan, 263 million yuan, and 415 million yuan respectively [4] - The independent direct bank model is gradually being overshadowed by the overall digitalization trend in the banking sector, with only one independent direct bank license remaining in China after the closure of Postal Bank of China Huinong Bank [5]

Core Viewpoint - Postal Savings Bank of China announced the absorption and merger of its wholly-owned subsidiary, Postal Bank of China Huinong Bank, marking the exit of the second independent legal direct bank in China within a short span of three years since its establishment [1][3]. Group 1: Background and Development - The establishment of Postal Bank of China Huinong Bank was part of Postal Savings Bank's digital transformation strategy, intended to serve as a "testbed" for innovation [3][4]. - The bank was officially approved to commence operations in June 2022, but it has struggled to gain a significant presence in the market, with total assets of only 12 billion yuan and around 20 million registered users by June 2025 [3][6]. Group 2: Performance and Financials - The performance of Postal Bank of China Huinong Bank has been disappointing, with a net loss of 4.15 billion yuan in 2024, and cumulative losses exceeding 840 million yuan since its inception [6][7]. - The bank's non-performing loan ratio surged from 2.28% in 2023 to 6.66% in 2024, indicating severe credit quality issues [6][7]. Group 3: Regulatory and Compliance Issues - In July 2025, the bank faced a fine of 4.25 million yuan for violating clearing management regulations, adding to its compliance challenges [9][10]. - The high turnover in the bank's executive team, including the chairman and senior management, has contributed to operational instability [10]. Group 4: Industry Context - The direct banking model in China has faced significant challenges, with many independent legal direct banks struggling to establish themselves in a competitive environment dominated by traditional banks and fintech [12][13]. - As of July 2025, only about ten independent direct banking apps remain operational, a stark decline from their peak, indicating a consolidation trend in the industry [15].