Growth of China’s online banks outpaced traditional banks in 2018
May 14, 2019 (China Knowledge) - China’s online banks performed much better than traditional banks in terms of asset growth, balance sheet performance and non-performing loans (NPL).
Tencent-backed online bank WeBank’s assets surpassed the RMB 200 bln threshold and hit RMB 220 bln at the end of 2018. This represents an increase of 169% compared to the start of the year.
According to their latest financial report, WeBank’s managed loan balance went over RMB 300 bln and their on-balance sheet loan balance came in at RMB 119.8 bln, an increase of 151% compared to start of 2018. WeBank's customer base is also reported to exceed 100 million borrowers.
In terms of financial performance, WeBank’s operating revenue increased by 48% YoY in 2018 to RMB 10.03 bln. Net profits rose 70% to hit RMB 2.47 bln.
Another online bank that saw growth is MyBank, which is backed by Ant Financial. Their operating revenue rose by 47% YoY in 2018 to reach RMB 6.28 bln. Net profit saw lower growth as WeBank of 66.09% to reach RMB 6.71 mln.
Online banks are now expanding their customer base. MyBank reported providing their financial services to 12 million micro and small borrowers by extending their focus on rural village market.
This is also part of the online lenders’ plan to promote financial inclusion. Both WeBank and MyBank have lowered their loan interest rates. Last year, WeBank’s average interest rate dropped by nearly one percentage point compared to 2017, whereas MyBank’s average interest rate fell by 1.2 percentage point last year.
Online banks are increasing their research and development budget, in particular to the application of blockchain and artificial intelligence technology. WeBank spent RMB 980 mln in 2018 which represent a 50% YoY growth.
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