Latest Reports

  • Innovate to Elevate
    Innovate to Elevate In the dynamic and diverse financial landscape of the Asia-Pacific (APAC) region, banks are at a pivotal juncture, facing the twin imperatives of innovation and resilience to meet evolving consumer expectations and navigate digital disruption.
  • Catalyzing Wealth Management In The Modern Era
    Catalyzing Wealth Management In The Modern Era Hyper-personalized wealth management presents a paradigm shift from traditional models relying on static, generalized segments. Developing tailored investor personas based on psychographics, behaviours and fluid financial goals enables financial institutions to deliver rich and tailored customer experiences that resonate with next-generation priorities.
  • Navigating the Future of Fintech in Asia
    Navigating the Future of Fintech in Asia Although fintech has been a global phenomenon, nowhere has the combination of finance and technology been as impactful as in Asia. This report examines some of the key fintech trends that have been re-shaping Asia’s financial industry thusfar as well as examine the trends that will shape the future.

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Insight - Kapronasia

As part of Kapronasia's continuing webinar series, our next webinar on July 10th will be looking at Operational Risk Management in China's banking system. Given the events of recent weeks, risk management is once again key consideration for Chinese banks. To register for the webinar, please click here. 

With the liquidity crunch increasing in June and the interbank rate jumping to new highs, many state-owned banks are attempting to use the increased average wealth management product (WMP) yield to ease the tightened liquidity. Based on data from JRJ, the average monthly WMP yields in major state-owned banks increased in June compared to May based on the monthly average yields of the top 10 WMP in the bank. The average yields increased from 3.84% to 4.38% in the Industrial and Commercial Bank of China (ICBC), 4.16% to 4.57% in the Bank of China (BOC), 3.77% to 4.11% in the Agricultural Bank of China (ABC), and 3.58% to 4.44% in China Construction Bank (CCB).

Chart showing monthly average wealth management product yield in china's state owned banks 

 

 

 

 

Recently, Google managed to beat its rivals including Apple and Facebook to buy Waze, an Israeli mobile-navigation startup. Google will pay for more than $1 billion for this relatively unknown company. Similarly in China. One month ago, Alibaba, a global B2B giant, invested about $3 billion into Amap, China’s leading map and local based services provider which made Alibaba Amap’s biggest shareholder. Other China’s internet giants, Tencent and Baidu have also been focusing on their mobile map offerings.

We mentioned earlier this week that there had been a sharp uptick in the Shanghai Interbank rate in the past month. This peaked last night at about 13%. With the attention, rightly so, that this is getting, it's worth taking a look at the issue and what's involved. 

According to China Mobile, China’s largest mobile network operator, its monthly mobile payment transaction value, for the first time, exceeded 10 billion RMB, reaching 11 billion in May – even larger than the total transaction value of 2011.

China Mobile Payments

 

Since China Mobile launched its mobile payment business in 2009, the number of transaction has rocketed at a staggering rate and it is expected that by the end of 2013 the total transaction value will hit 100 billion RMB. In the future, China Mobile will emphasize more on product innovation and customer services to reinforce its leading position in China’s mobile payment industry.

According to data released by the People’s Bank of China (PBOC), the interbank lending rate (weighted average interest rate) increased from 2.55% in April 2013 to 2.92% in May which will affect banking liquidity requirements. The interbank lending rate decreased from 2.77% to 2.47% in March, and it started to increase in April and May. The interbank lending rate in May is 0.42% higher year on year. The total interbank lending turnover was 21.85 trillion yuan, and the daily turnover reached 993 billion yuan.

 

 

 

 

Based on CSRC’s data, about 268 firms queuing for IPO in A-share markets chose to quit the IPO process up until 31 May, 2013. 109 of these firms are supported by local VCs and PEs, which take about 41% of the total number of the firms who applied for IPOs in A-share markets. About RMB 8.45 bn investments from local VCs and PEs are locked into these pre-IPO firms, which is challenging for the VC and PE firms who might have been expecting an exit.

The tough supervision of the CSRC is one of the main reasons pre-IPO firms have left the process and only very few meet the standards and of those who did, the worry is that many have cooperated with local stock investment institutions to fake their financial performances to get them listed.

IPO Terminations in Shanghai A-share market

From the data released by People’s Bank of China for the first quarter 2013, the transaction volume of bankcards has reached to 100.27 trillion RMB, which is a 7.7% increase from the first quarter in 2012. The accumulated credit card issuance reached 343 million, which gives a credit card holding per capita is 0.26.

According to PBOC, at the end of 2013 Q1, China’s bankcard consumption transaction volume and value rose rapidly by 44% and 60%, respectively. Interbank transactions made up the majority of total transaction volume and value – accounting for 56% and 77%, respectively. At the end of 2013 Q1, the total circulation of bankcard in China reached 3.6 billion, increasing by 19% year-on-year, with 3.3 billion debit cards and 343 million credit cards. The average bankcard consumption per person increased by 60% to 4900 RMB.

A few weeks ago, we looked at the growth of wealth management in China – a big aspect of wealth management is the Trust industry, which we look at today.

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