Corporate Banking in China

by Hua Zhang, January 20, 2009
Industry Trends
Asia-Pacific

Abstract

Beijing, China 21 January 2009

: Opportunities for Entry

accounts for 53% of total banking revenues and 62% of profits. From 2004 to 2007, wholesale banking enjoyed an annual growth rate of 22%, and is expected to maintain a growth rate of around 24% from 2008 to 2010. 

China's banking industry is currently dominated by wholesale banking services. However, the wholesale banking industry has been declining on yearly basis, largely due to the rapid development of the retail banking services, which account for 30% of banking services in China. At the existing growth rate, China's retail banking services shall exceed its wholesale banking services in five years.

The growth rate of enterprise lending in China is not high, but its proportion in the nation’s wholesale banking business remains large. During the period of 2002 to 2007, the growth rate was 13% for loan services. Corporate loan trends include a tendency to provide loans to small and medium enterprises, with a greater preference towards loans with high risks and returns; and the rapid increase of new loan products.

On the other hand, fee-based business accounts for a very small proportion of the wholesale banking business, but is experiencing rapid growth. Services achieving the fastest growth include cash management, which is increasing at a rate of 200% a many banks and 135% at ICBC; international settlement, which experienced an annual growth rate of 33% from 2003 to 2007; and financing business for institutional clients, which increased at a rate of 213% from 2005 to 2007 and is expected to reach RMB 648.4 billion in 2008.

In terms of the number of institutions in the banking industry of China, foreign-funded financial institutions, financial leasing companies and rural cooperative banks reported the fastest growth, with growth rates of 107%, 66.7% and 41.25%, respectively.

"The most popular way for foreign banks to move into China is to establish branch offices in China; purchase and hold the shares of domestic banks in China, and conduct business cooperation with Chinese banking institutions," says Zhang Hua, Celent analyst, as well as the author of the report.

The 60-page report contains 5 tables and 35 figures. A table of contents is available online.

of Celent's Corporate Banking research service can download the report electronically by clicking on the icon to the left. Non-members should contact info@celent.com for more information.  

Celent is a research and advisory firm dedicated to helping financial institutions formulate comprehensive business and technology strategies. Celent publishes reports identifying trends and best practices in financial services technology and conducts consulting engagements for financial institutions looking to use technology to enhance existing business processes or launch new business strategies. With a team of internationally based analysts, Celent is uniquely positioned to offer strategic advice and market insights on a global basis. Celent is a member of the Oliver Wyman Group, which is a wholly-owned subsidiary of Marsh & McLennan Companies [NYSE: MMC].

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Table of Contents

Beijing, China 21 January 2009

: Opportunities for Entry

 

Executive Summary 3
China's Banking Industry 6
  6
  6
  7
  9
Corporate Banking Business 11
  12
  14
Deposit and Loan Business 16
  17
  18
  18
  21
  23
  25
Fee-Based Business 28
  28
  29
  33
  34
  36
Channels for Corporate Banking 38
  38
Competitive Landscape 40
  42
  46
  48
  51
Conclusion 53

 

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