Morningstar | Ping An Bank Revenue Growth Accelerated in 2018, Increased FVE on Improved Asset Management Outlooks
Ping An Bank has been transforming into a retail-focused bank. While we believe it has yet to earn a moat, we’re positive about its transformation, given its ability to leverage its parent’s huge customer base and integrated offline and online financial platform.PAB operates with the “515 Core Business Model†to accelerate customer migration and the development of technological innovations. Through one master account, PAB offers five key products: credit cards, consumption loans, wealth-management products, bancassurance products, and home mortgage loans. The bank acquires new customers via five channels: various business segments of parent Ping An Group, the agency force owned by Ping An life insurance, PAB’s corporate banking segment, PAB’s online and offline presences, and third-party institutions. We see this strategy as differentiated and not easily replicable by peers. This is attributable to PAB’s ability to leverage its parent’s reputed brand, and its integrated online/offline platform to smoothly migrate the group’s premium customer base of 184 million financial customers and 538 million Internet users, versus PAB’s 84 million retail customers. As a result, retail banking profitability has improved strongly, contributing nearly 70% of total operating profits versus 8% in 2013. PAB's customer base grew at an about 30% CAGR to 84 million during 2013-18. The bank's external and internal migration platforms contributed about 40% of new customers and assets under management, and nearly half of new credit card issuance. PAB also benefits from industry-leading banking digital innovation and the group’s scenario-based online/mobile platform, which aims to increase customer stickiness and daily interactions by offering services for auto transactions, wealth-management consultancy, health management, housing consultancy, lottery and games, and so on. The effectiveness of the group's digitalization strategy is evidenced by its rapid growth in customer base and increasing cross-sales.Ping An Bank is providing commercial banking services approved by Bank of China. Co is engaged in the offering of company loans, deposits, trade finance, company wealth management, and company intermediary services; providing personal loans, deposits, bank cards, personal wealth management services, and other personal intermediary services; local and foreign currency tradings; bond investments and other money market operations; and providing central management on non-performing assets, equity investments and nonclassifiable assets, liabilities, revenues and expenditures. As of Dec 31 2013, Co. had total assets of RMB1,891,741,000,000 and total deposits of RMB1,667,791,000,000.
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