Summary of Key Points
Ping An Bank once relied on the rapid growth of retail loans (housing mortgages, credit cards, and car loans) to firmly maintain its position among the top tier of banks in the industry. However, after 2022, due to an increase in bad debts from these businesses, the management (under the leadership of Ji Guangheng) actively reduced high-risk retail operations, which led to a significant decline in the growth rate of personal loans (even negative growth), dragging down the overall credit growth rate to the lowest among joint-stock banks. The bank has since embarked on its second transformation, focusing on strengthening its corporate business and optimizing debt costs. Nevertheless, it is still in the midst of this transitional period, with profit growth slowing as loan volumes have decreased.
Detailed Analysis
1. Credit Growth Rate at the Bottom: Personal Loans Turning from a Driver to a Drag
The current poor credit growth rate of Ping An Bank is mainly due to the decline in personal loans. From 2016 to 2021, the growth rate of personal loans (including credit cards) consistently remained in double digits (with a peak of 56.95%), serving as the main driver of overall loan growth. But after 2022, it took a sharp turn for the worse, with negative growth expected for 2024 (at -10.65%). In contrast, although the growth rate of corporate loans has rebounded (remaining above 11% from 2022 to 2024), their volume is not large enough to compensate for the shortfall in personal loans, resulting in an overall credit growth rate of only 2.17%, ranking second-to-last among joint-stock banks.
2. Decline in Personal Loans: Rising Bad Debt Rates in Three Key Areas
The previous pillars supporting personal loans were housing mortgages, credit cards, and car loans, but the bad debt rates for these businesses have been increasing year by year:
- The bad debt rate for credit cards rose from 1.43% in 2016 to 2.11% in 2021;
- The bad debt rate for car loans increased from 0.89% to 1.26%;
- Although the bad debt rate for housing mortgages is low, it also decreased from 23.94% in 2021 to 8.91% in 2025.
After Ji Guangheng took over as president in 2023, he began to actively reduce high-risk retail operations by targeting and reducing the number of customers with poor credit and weak repayment capabilities in credit card and consumer loans, while shifting towards lower-risk businesses such as mortgage lending. This directly caused a slowdown in the growth rate of personal loan volumes.
3. Volume Decline Hindering Profitability: Both Interest Income and Profits Have Shrank
The interest rate on personal loans is much higher than that on corporate loans (for example, the average interest rate for personal loans was 7.23% in 2021, compared to 4.28% for corporate loans). Personal loans once accounted for as high as 62.36% of the bank's total loans and were a major source of revenue. Now, their proportion has dropped to 50.94%, and the interest rate has also decreased to 4.79%, leading to a reduction in net interest income. In 2025, net interest income fell by 5.79%, contributing to a 10.4% decrease in total revenue and a 4.21% decline in net profit.
The situation has become more problematic because during the period of rapid loan growth, bad debts were diluted due to the large loan volume, making the bad debt ratio appear lower. Now that loan growth has slowed down, the accumulated bad debts have become more apparent, with the bad debt rate slightly increasing (from 1.02% to 1.05%).
4. Second Transformation: From "Aggressive Retail" to "Stable Balance"
Under Ji Guangheng's leadership, Ping An Bank has adopted a new strategy focusing on "strengthening retail operations, refining corporate business, and specializing in interbank services," with the core emphasis on stability:
- Shift to Lower-Risk Retail: Reducing high-risk unsecured consumer loans and increasing mortgage lending, aiming to make mortgage-related loans account for more than 60% of total loans;
- Corporate Business as a Support: Expanding into high-quality corporate segments such as technology finance, green finance, and central and state-owned enterprises, with corporate loans accounting for nearly 50% of the total loan volume by 2025;
- Cost Optimization: Abandoning costly time deposits and reducing debt costs from 2.21% in 2021 to 1.67% in 2025 to offset the impact of declining asset interest rates;
- Delegating Power to Branches: Streamlining operations by abolishing headquarters departments and granting approval authority to branches, allowing them to more efficiently attract high-quality customers.
5. Transitional Pain: No Clear Signs of Improvement Yet
Three years into this transformation, there is still no significant improvement in growth rates: the bad debt rate has not decreased, and profit growth continues to decline, with the credit growth rate remaining at the bottom. The management believes this is a necessary part of the adjustment process. However, when growth will return depends on two factors: whether the lower-risk retail business can thrive and whether the corporate business can continue to support the bank's performance. For now, the transformation is still in the "breaking" phase, with the desired "establishing" effects not yet fully realized.
Conclusion
Ping An Bank's story reflects a shift from relying on retail loans for growth to slowing down due to risks and then pursuing stability through transformation. Although its current growth rate is low, the direction of the transformation is aimed at long-term sustainability, and the short-term challenges are still being faced. Whether the bank can return to the top tier in the future will depend on whether the new strategies can keep up with the pace of change.