Established in 1987 in Shenzhen, the forefront of China’s reform and opening-up drive, China Merchants Bank (“CMB”) is China’s first joint-stock commercial bank and also the first bank to attend the national experiment for the promotion of China’s banking industry reform driven by endeavors from outside the government.
Since its inception 24 years ago, CMB has grown with China’s economic progress from a small bank with a capital of 100 million yuan, one branch and over thirty employees into a nationwide joint-stock commercial bank that has a total net capital of 140 billion yuan, a total asset of 2.6 trillion yuan, over 800 branches and over 50,000 employees, ranking it among the world’s top 100 banks.
CMB has developed into the most influential commercial bank brand in China thanks to continuous financial innovation, quality customer service, prudent management and strong business performance. For many consecutive years, CMB has been ranked among China’s top commercial banks according to comprehensive assessment by CBRC. The bank has won a number of titles, including the Best Commercial Bank of China, the Best Retail Bank in China, the Best Private Bank in China, China’s Best Custody Specialist from the British Financial Times, Euromoney and The Asset. The Bank was shortlisted as a World-Class Chinese Brand and ranked No. 1 in the P/B list of the world’s top 50 banks with the largest market value by the British Financial Times. It was also listed No.60 among the world’s Top 1,000 Banks by The Banker.
From January to September 2011, CMB has obtained a net profit attributable to shareholders of 28.388 billion yuan, a 37.91% year-on-year increase; an operating income of 70.29 billion yuan; a net interest income of 55.624 billion yuan, a 36.1% year-on-year increase thanks to the increased interest earning assets and a steadily rising net interest spread and net interest margin. Currently, CMB has 82 branches and 763 sub-branches in 96 cities, 2 branch-level specialized agencies (the Credit Card Center and the Small Enterprise Credit Center), 1 rep-office, 1,917 self-service banks and 1 wholly-owned subsidiary (CMB Financial Leasing Co., Ltd) in mainland China. For overseas market, CMB has 2 wholly-owned subsidiaries — Wing Lung Bank Ltd. and CMB International Capital Corporation Limited and 1 branch (Hong Kong Branch) in Hong Kong, a branch and a rep-office in New York, and two rep-offices in Taipei and London.
CMB has led China’s banking industry by creating a synergy of “Profit, Quality, Scale” and a structure of core values including “Service, Innovation and Stability”. With respect to corporate governance, CMB separates ownership from management and is one of China’s banks that have established a modern corporate governance structure with clear division of work and mutual balance and supervision between the board of directors, the board of supervisors and the management team. In terms of HR management, CMB was the first to abolish the “three-guarantee mechanism” (guaranteed job, guaranteed position and guaranteed salary) and adopt a flexible system, under which employees can be dismissed, managers can be promoted or demoted, and remuneration can be flexibly adjusted. CMB has established China’s first bank-wide IT platform and first telephone bank and became the first to offer nationwide deposit and withdrawal, and real-time fund transfer services.
CMB has launched a large number of innovative products that are highly competitive. The All-in-One Card is the first bank card managed based on customer numbers. CMB has issued 5,988 All-in-One Cards, with an average deposit of over RMB9,800, making it one of the most popular bank cards in China. All-in-One Net is China’s first online banking platform. The improving online and telephone banking services significantly reduce the workload of business outlets. In H1 2011, 47.85% of the general over-counter services and 85.38% of the retailer banking services were completed online or by telephone. Over 4 million users have subscribed for the CMB mobile banking services by the end of November 2011, which has formed iPhone, Android and web-version mobile banking platforms with an aim to cover all mid-to-high-end smart phone users. CMB issued the first dual-currency credit card compliant with international standard and 36 million such cards have been issued to date. This issuance is even included in the MBA case studies of HarvardUniversity. The Sunflower Finance, China’s first financing product for high-end customers, is very popular, providing services to 750,000 customers. CMB is also the first Chinese joint-stock commercial bank that provides private banking services, earning it the title ‘Best Private Bank of China’. Its interbank cash management service was the first of its kind in China’s banking industry, making it the preferred choice for large enterprise groups in terms of fund management. CMB also leads the pack of joint-stock commercial banks in terms of personal savings deposits, personal consumer lending, asset custody, corporate annuity, offshore financial business and more. Its risk management is highly praised in the industry for maintaining high-quality assets. By the end of September 2011, CMB’s non-performing loan ratio was 0.61% and the non-performing loan reserve coverage ratio was 370.97%.
In the new century, under the leadership of Dr. Ma Weihua, President and CEO of CMB, CMB has ridden the boom in IT construction and world economy, formulated and implemented scientific development strategies after weathering liquidity risks including the ban of offshore asset business, bank run at certain branch and risks arising from non-performing assets as a result of rapid expansion. Firstly, given that all banks were initially at the same level in terms of internet-related businesses, CMB aggressively developed electronic banking channels, including online, telephone and self-service banking services, which offset the disadvantage of inadequate banking network and won a large number of high-value customers. Secondly, CMB was listed in Shanghai and Hong Kong in 2002 and 2006 respectively, which fed the capital needed for its rapid development and also promoted the revolution of its internal management procedures as part of its strategy to expand internationally. With the support from the Chinese government and through hard work, it established a branch in New York despite the deepening financial crisis, breaking the 17-year denial of Chinese banks to the US market. The CMB New York Branch was likened to a “breeze in the winter of the Wall Street” by Mr. Bloomberg, the then Mayor of New York City. In the same year, CMB acquired Wing Lung Bank, the fourth largest bank in Hong Kong with a history of 75 years for more than HKD30 billion. Now the renovated bank is beginning to perform well and the takeover was described by the British Financial Times as “a case that cannot be copied”.
In 2004, CMB spearheaded the industry’s business strategy transformation. By stepping up efforts to offer retail, fee-based and SME services, CMB has developed a distinctive business structure and style. CMB is entering a new stage of strategic development. With the aim of adapting to changes in internal and external business environments and continuing to strengthen its competitive edges, CMB will, while stepping up efforts to revamp business strategies, implement the Second Transformation strategy aimed at reducing capital consumption, raising loan pricing, controlling financial costs, winning more higher-value customers, and enhancing its risk control. These efforts will be focused transforming the business model into a full-featured one as part of its drive for intensive management. “We are here just for you.” We will seek to improve and expand our lineup of financial services for our customers and for society and become China’s leading bank that is internationally competitive.”