21 August 2019

CCB to strengthen cost control amid rate liberalization

China Construction Bank Corp. (00939.HK) will strengthen cost control as the government pushes forward the liberalization of interest rates, the lender’s top management said.

“Rate liberalization is one of the challenges for commercial banks amid the financial reform as it would create an impact on our operation model and profit structure,” chairman Wang Hongzhang told a press conference in Hong Kong on Monday. “Besides strengthening cost control, we will also continue to transform into a comprehensive service-focused institution from a traditional one focusing on deposits and loans.”

The deposit insurance scheme will also pose a challenge, Wang said. “It might not be a problem for big lenders, but the problem is whether we can have a fair competition with the smaller ones.”

Wang said Chinese lenders also have to face the liquidity risk. “Liquidity in the banking system has turned to tight from loose in the previous year with reference to the tightened liquidity last June and November. CCB will strengthen assets and liabilities management to deal with the situation,” he said.

On the strategic transformation plan, Wang said the company aims to increase the growth and growth rate of non-interest income so that it contributes more than interest income, while business from retail sectors will contribute more than other businesses. “The company will also put more effort in [helping] mid-sized firms with comprehensive services,” he said.

The state-owned bank plans to issue up to 60 billion yuan (US$9.66 billion) in capital instruments with writedown features by 2015, including preferred shares. It will soon issue 20 billion yuan of capital instruments with writedown features in the domestic market to replenish its Tier 2 capital.

– Contact HKEJ at [email protected]




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