Jack Ma’s bank ex­pand­ing into un­der­ser­viced sec­tor

China Daily (Hong Kong) - - BUSINESS -

SHANG­HAI — MYbank, the two-year-old Chi­nese on­line lender that al­ready has 3.5 mil­lion small-business cus­tomers, said it plans to push deeper into a seg­ment that’s l ong been ig­nored by t he coun­try’s big­gest banks.

MYbank wants to cap­i­tal­ize on its links with bil­lion­aire Jack Ma’s Alibaba Group Hold­ing Ltd by of­fer­ing loans to the more than 10 mil­lion smaller busi­nesses that use the com­pany’s e-com­merce plat­forms, MYbank Pres­i­dent Huang Hao said in a in­ter­view on Satur­day.

The Hangzhou-based lender is con­trolled by Ant Fi­nan­cial, Alibaba’s fi­nan­cial af­fil­i­ate.

Huang said he is look­ing to win “as many as pos­si­ble” of China’s 70 mil­lion to 80 mil­lion small busi­nesses as cus­tomers, most of which have no ac­cess to bank l oans be­cause they lack col­lat­eral.

MYbank was one of the first Chi­nese lenders — along with Ten­cent Hold­ings Ltd’s WeBank — to be estab­lished com­pletely with pri­vate in­vest­ment un­der a trial pro­gram un­veiled in 2014.

“We are in a dif­fer­ent stra­tum from the tra­di­tional banks,” said Huang, 43, who was pre­vi­ously head of elec­tronic bank­ing at China Con­struc­tion Bank Corp.

“We are like cap­il­lar­ies reach­ing ev­ery part of the so­ci­ety. It could be a small restau­rant, a break­fast stand. No other fi­nan­cial in­sti­tu­tion would have served them be­fore.”

For­mally known as Zhe­jiang E-Com­merce Bank Co, MYbank was able to more than quadru­ple its lend­ing through 2016, tak­ing its out­stand­ing loans to 33 bil­lion yuan ($4.9 bil­lion).

In­ter­est gen­er­ated from those loans helped MYbank re­port a profit of 316 mil­lion yuan last year, re­bound­ing from the 69 mil­lion yuan loss it had in the fi­nal seven months of 2015 after it started op­er­a­tions, ac­cord­ing to an earn­ings state­ment posted on June 28.

Its non­per­form­ing-loan ra­tio was around 1 per­cent, Huang said, lower than the na­tional av­er­age of 1.74 per­cent.

The bank’s tech­nol­ogy, which runs loan applications through more than 3,000 com­put­er­ized risk-con­trol strate­gies, has kept delin­quen­cies in check, he said.

Last year’s lend­ing ex­plo­sion came at a cost, how­ever, drag­ging its cap­i­tal ad­e­quacy ra­tio down to 11.07 per­cent by De­cem­ber, from 18.51 per­cent a year ear­lier.

While the bank has no im­me­di­ate plan to boost its buf­fers, it will con­sider mea­sures in­clud­ing is­su­ing as­set­backed se­cu­ri­ties to keep cap­i­tal at an ap­pro­pri­ate level, Huang said.

MYbank charges its small­busi­ness cus­tomers lend­ing rates be­tween 5 per­cent and 14 per­cent an­nu­ally, with many paying 7 per­cent to 8 per­cent, Huang said. That level is lower than the rates paid by sim­i­lar clien­tele in some Chi­nese cities.

For ex­am­ple, small busi­nesses in the east­ern city of Wen­zhou paid an av­er­age of 15 per­cent for loans from un­der­ground banks, ac­cord­ing to a pri­vate lend­ing net­work in the city that tracks the data.

Huang’s bank has also tried to shel­ter it­self from fund­ing volatil­ity and surg­ing interbank bor­row­ing costs by at­tract­ing more de­posits.

By en­cour­ag­ing re­mote ac­count open­ings, MYbank lured 23 bil­lion yuan of de­posits from its cus­tomers at the end of De­cem­ber, up from al­most zero a year ear­lier, he said.

We are in a dif­fer­ent stra­tum from the tra­di­tional banks.” Huang Hao, MYbank pres­i­dent

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