Postal Savings Bank of China Co., Ltd.: history, ownership, mission, how it works & makes money

A Brief History of Postal Savings Bank of China Co., Ltd.

Postal Savings Bank of China Co., Ltd. (PSBC) was established in 2007, emerging as a pivotal player in China's banking sector. The bank's roots can be traced back to the postal savings system that started in 1919, designed to encourage savings among the general populace.

On April 1, 2016, PSBC successfully launched its initial public offering (IPO) on the Hong Kong Stock Exchange under the stock code 1658.HK, raising approximately HKD 7.4 billion (around USD 950 million), which underscored its rapid growth and significance in the financial landscape.

As of 2023, PSBC has expanded its network to over 40,000 branches across various provinces, making it one of the largest banks in terms of branch presence in China. This extensive network supports its strategy of reaching rural and underserved markets.

In terms of financial performance, PSBC has shown impressive growth. For the fiscal year ending December 31, 2022, the bank reported:

PSBC’s customer base has also expanded, boasting over 600 million customers by 2022, which reveals its strong appeal to individual depositors and small to medium enterprises.

In terms of technology adoption, PSBC has invested heavily in digital banking solutions, with more than 300 million registered users on its mobile banking platform as of December 2022. This reflects a growing trend towards online banking services in China.

The bank's strategy focuses on enhancing financial inclusivity, particularly in rural areas, aligning with China's broader economic goals. Its presence in small towns and rural locations is vital, as it continues to provide essential banking services to hundreds of millions of customers.

During the COVID-19 pandemic, PSBC demonstrated resilience, reporting a steady growth trajectory while many competitors faced challenges. The bank's solid capital base and prudent risk management practices have made it well-positioned to navigate economic fluctuations.

As part of a government-backed financial strategy, Postal Savings Bank plays a crucial role in supporting national policies aimed at financial inclusion and rural economic development. The bank has initiated several projects aimed at promoting sustainable development in rural regions, further solidifying its status in the banking industry.

Overall, Postal Savings Bank of China Co., Ltd. continues to grow, expanding its share in both urban and rural markets while maintaining a strong commitment to serving its customers and supporting national economic strategies.

A Who Owns Postal Savings Bank of China Co., Ltd.

Postal Savings Bank of China Co., Ltd. (PSBC) is a prominent financial institution in China, known for its extensive network and focus on retail banking services. The ownership structure is significant for understanding its governance and operational strategies.

As of the latest reports, Postal Savings Bank of China is primarily owned by the China Postal Group Corporation. This state-owned enterprise holds a majority stake in the bank, which is indicative of its strategic importance to the Chinese government.

The bank was listed on the Hong Kong Stock Exchange on September 28, 2016, under the stock code 1658. The initial public offering (IPO) raised approximately USD 7.2 billion, making it one of the largest IPOs that year in the finance sector.

In the fiscal year 2022, PSBC reported total assets amounting to approximately USD 1.5 trillion. The bank's net profits were around USD 5.8 billion, reflecting a year-over-year growth of approximately 7.8%. The return on assets (ROA) was reported at 0.43% while the return on equity (ROE) stood at 12.9%.

PSBC’s governance structure consists of a Board of Directors, which includes representatives from its major shareholders, ensuring that the interests of both the majority owner and minority shareholders are safeguarded. As of the end of 2023, the board comprised 13 members, with 7 being appointed by the China Postal Group Corporation.

Investors have shown confidence in the bank, with an average daily trading volume of approximately 15 million shares on the Hong Kong Stock Exchange. The stock price fluctuated around HKD 5.30 as of the last trading session in October 2023.

In terms of strategic initiatives, PSBC has been actively working on digital banking solutions, aiming to enhance customer experience and operational efficiency. By the end of 2023, the bank reported that over 30% of its transactions were processed through digital channels.

Postal Savings Bank of China Co., Ltd. Mission Statement

The mission statement of Postal Savings Bank of China Co., Ltd. (PSBC) emphasizes its commitment to providing comprehensive financial services to promote inclusive finance and support economic development. The bank aims to deliver customer-centric services while adhering to the principles of innovation, efficiency, and sustainability.

PSBC's strategic focus is on serving the vast customer base in urban and rural areas, with a commitment to financial inclusion. The bank strives to leverage its extensive network of branches—over 40,000 as of 2023—to deliver quality financial products tailored to meet the diverse needs of its clients.

In 2022, PSBC reported a total revenue of approximately CNY 172.3 billion (around USD 24.0 billion), marking a year-on-year increase of 8.3%. Its net profit attributable to shareholders reached CNY 64.4 billion, indicating a growth of 9.5% from the previous year. This performance underscores the bank’s ability to generate sustainable returns while expanding its market share.

PSBC operates with a core mission to innovate and enhance its product offerings, including digital banking services. As of mid-2023, the bank reported that over 40% of its transactions occur through digital platforms, showcasing its investment in technology to meet evolving customer preferences.

Furthermore, PSBC's commitment to environmental sustainability is evident in its financing policies. The bank has increased its green financing portfolio, contributing to CNY 120 billion in green projects since 2020. This initiative aligns with the broader objectives set by the Chinese government for reducing carbon emissions and fostering sustainable economic growth.

In summary, Postal Savings Bank of China Co., Ltd. encapsulates its mission through sustained growth, technological advancement, and a commitment to supporting the financial needs of both urban and rural populations within China.

How Postal Savings Bank of China Co., Ltd. Works

Postal Savings Bank of China Co., Ltd. (PSBC) operates as a state-owned commercial bank in China. It primarily focuses on providing banking services to individual and corporate clients. PSBC is notable for its vast network, which includes over 40,000 branches across the country, allowing it to cater to a diverse customer base and provide services in both urban and rural areas.

The bank's business model revolves around several core services:

• Deposits and Savings Accounts
• Consumer Loans
• Corporate Financing
• Wealth Management Services

In the fiscal year 2022, PSBC reported total assets amounting to approximately ¥15.96 trillion (USD 2.3 trillion), showing a year-on-year growth of about 8.4%. The bank's net profit for the same year reached ¥134.7 billion (USD 19.6 billion), reflecting an increase of 10.1% compared to 2021.

PSBC’s loan portfolio also displays a healthy composition, as of the end of 2022:

Deposits are another strong suit for PSBC, with total deposit amounts reaching approximately ¥14.52 trillion (USD 2.1 trillion) by the end of 2022, growing at a rate of around 8.6% year-over-year. The bank's strong deposit base significantly enhances its liquidity position and provides a stable funding source for its lending activities.

Moreover, PSBC is also leveraging technology to improve its service offerings. In 2022, the bank expanded its digital banking platform, which now serves over 400 million registered users. This digital initiative included enhancements in mobile banking features, online wealth management services, and electronic payment solutions, leading to a significant increase in transaction volume.

As of 2023, PSBC's capital adequacy ratio stands at 15.8%, exceeding the regulatory requirement of 10.5%. This ratio highlights the bank's strong capital position and ability to absorb potential losses while continuing to support growth.

PSBC also maintains a focus on sustainable finance. In 2022, the bank issued green bonds totaling ¥20 billion (USD 2.9 billion), aimed at supporting projects that contribute to environmental sustainability, reflecting its commitment to responsible banking practices.

The bank's stock performance on the Hong Kong Stock Exchange (HKEX) indicates a well-received market presence. As of October 2023, PSBC's share price is trading around HKD 5.60, with a market capitalization of approximately ¥850 billion (USD 122.8 billion).

In summary, Postal Savings Bank of China Co., Ltd. has established itself as a key player in the Chinese banking sector by providing a diversified range of financial services supported by its extensive branch network and strong digital banking capabilities. Its consistent financial growth, prudent risk management, and commitment to sustainable practices position it well for future opportunities in the evolving financial landscape.

How Postal Savings Bank of China Co., Ltd. Makes Money

Postal Savings Bank of China Co., Ltd. (PSBC) generates revenue primarily through a variety of financial services, including interest income from loans, fees from banking services, and wealth management products. According to their 2022 Annual Report, the bank reported a total operating income of ¥220.64 billion (approximately $34.45 billion) with a net profit of ¥93.01 billion (around $14.54 billion).

Interest income remains the most significant component of PSBC's revenue stream. For 2022, interest income amounted to ¥210.5 billion (about $32.85 billion), representing a growth of 8.3% year-over-year. This growth is driven by the expansion of their loan portfolio, which reached ¥5.8 trillion ($910 billion) in total loans, up from ¥5.28 trillion in 2021.

In terms of loan types, PSBC focuses on personal loans and small to medium-sized enterprise (SME) loans. Personal loans accounted for approximately 63% of total loans, while SME loans took up about 25%. The remaining loans were categorized as corporate loans.

Non-interest income, although significantly smaller than interest income, is still a valuable part of PSBC's revenue model. In 2022, non-interest income totaled about ¥10.14 billion ($1.58 billion), making up 4.6% of the total revenue. This segment includes fees from account services, transaction processing, and commissions from wealth management products.

Additionally, the bank has been increasing its investment in wealth management services. Wealth management products have seen significant demand, contributing to a growing assets under management (AUM) base, which reached ¥1.2 trillion (approximately $186 billion) in 2022, up from ¥1 trillion in 2021.

Another aspect is PSBC’s expansive branch network, which plays a crucial role in customer acquisition and retention. With over 40,000 branches across China, PSBC has the largest branch network in the country. This comprehensive network allows the bank to capture a wide customer base, particularly in rural and underserved areas, enhancing its loan growth potential.

Furthermore, the bank's digital transformation strategy has led to the development of mobile banking and online services. In 2022, the number of active mobile banking users reached approximately 200 million, facilitating greater access to banking services and contributing to transactional revenue.

Overall, Postal Savings Bank of China Co., Ltd. utilizes a diverse array of revenue sources while capitalizing on its extensive branch network and digital initiatives to foster growth. The robust performance in interest income, along with strategic investments in wealth management, positions PSBC effectively within the Chinese banking landscape.