Online lender MYBank (网商银行) has flagged a sharp reduction in its issuance of interbank certificate of deposit (CD) this year, and increased focus on retail deposits as a source of funds.
MYBank’s recently released its 2019 interbank CD issuance plan, which outlines issuance of 20 billion yuan this year as compared to planned issuance of 30 billion yuan in 2018.
Actual issuance of interbank CD’s by MYBank in 2018 was around just 500 million yuan, however, for a YoY drop of 99.05% compared to issuance of 52.75 billion yuan in 2017.
MYBank’s reduction in planned interbank CD issuance stands in sharp contrast to other commercial lenders in China, the majority of whom are stepping up their quotas.
As of mid-February 15 listed Chinese A-share banks had announced increases in planned interbank CD issuance, as compared to 10 who are keeping levels on par with last year, and just three who foresee reductions.
Domestic analysts point out that China’s smaller commercial banks have long depended upon interbank lending as a source of funds, given the difficulty they experience competing against the big state-owned banks for retail deposits.
Online direct banks in China may be proving far more adept at accessing retail funds – particularly given that many are backed by established tech giants such as Alipay in MYBank’s case, Baidu in the case of AIBank and Tencent for WeBank.
MYBank’s total liabilities saw a surge last year, rising to 115.701 billion yuan as of the end of September 2018, for an increase of 42.149 billion yuan, or 57.3%, compared to roughly 73.5 billion yuan at the end of 2017.
Deposit growth stalled in 2017, rising by 7.25% to reach 25.168 billion yuan, as compared to a 111% rise in interbank funds and funds from other financial institutions to reach 38.088 billion yuan.
MYBank nonetheless saw astronomical growth in retail deposits the year previously, rising from 344,400 yuan as of the end of 2015 to 23.212 billion yuan at the end of 2016.
Tencent’s WeBank saw a similar surge in retail deposits over the same period, with a rise from 145 million yuan at the end of 2015 to 3.297 billion yuan at the end of 2016.
Retail deposits also stalled for WeBank in 2017 however, accounting for just 7.27% of its total liabilities of 73.372 billion yuan at the end of 2017,as compared to funds from other banks and financial institutions, which at 45.213 billion yuan accounted for 61.62% of the total.
China’s direct banks nonetheless see deposit growth as the key to future expansion of the liabilities side of their balance sheets.
“MYBank is expanding its sources of funds and further increasing deposits, to provide better integrated financial services to small and micro-enterprises,” said one executive from the online lender to JRJ.com.