As retail loan risks rise across the banking sector, Postal Savings Bank of China (PSBC) (601658.SH), which has long focused on retail banking, is also feeling the pressure on asset quality.
In 2024, the bank’s non-performing loans (NPLs) and special-mention loans (SMLs) both increased significantly, with non-performing personal business loans surging by over 40%.
PSBC reported an operating income of RMB 348.775 billion for 2024, up 1.83% year-on-year. Net interest income grew by 1.53% to RMB 286.123 billion, while net profit increased by RMB 2.92 billion to RMB 86.716 billion, a growth of 0.34%. The net interest margin declined by 14 basis points (bps) to 1.87% from 2.01% in the previous year.
In terms of asset quality, PSBC’s NPL balance stood at RMB 80.319 billion as of the end of 2024, an increase of RMB 12.859 billion or 19% year-on-year. The NPL ratio rose by 0.07 percentage points to 0.90%. The balance of SMLs surged by RMB 29.376 billion to RMB 84.328 billion, marking a 53.45% year-on-year increase. SMLs accounted for 0.95% of total loans, up 0.27 percentage points from the previous year. The combined ratio of NPLs and SMLs reached 1.85%, up 0.34 percentage points.
Another notable trend is the significant increase in loan impairment provisions and write-offs. In 2024, PSBC’s loan impairment losses amounted to RMB 30.016 billion, an increase of RMB 3.133 billion or 11.65% year-on-year. Meanwhile, the NPL provision coverage ratio reached 286.15%, down 61.42 percentage points from the previous year.
Notably, personal loan defaults increased notably, especially in small business loans. By the end of 2024, NPLs in personal business loans reached RMB 33.839 billion, up 41.31% year-on-year, with the NPL ratio rising to 2.21%. The overall NPL ratio for personal loans climbed from 1.12% to 1.28%.
According to the National Financial Regulatory Administration, by the end of 2024, commercial banks’ total NPL balance stood at RMB 3.3 trillion. Analysts estimate that retail non-performing assets—including credit card loans, personal business loans, and consumer loans—account for about 30% of this total.
Industry experts attribute the rising risk in retail loans to the rapid growth of household leverage in previous years, the delayed exposure of credit risks, and the impact of economic downturns and pandemic-related disruptions on employment and income. Data from the China Credit Asset Exchange Center shows that the transaction volume of bulk sales of personal NPLs reached RMB 158.35 billion in 2024, up 64.04% from RMB 96.53 billion in the previous year, further highlighting the growing issue of retail loan defaults in the banking sector.
The annual report also showed that by the end of 2024, PSBC’s total assets had reached RMB 17.08 trillion, up 8.64% year-on-year, while total liabilities grew by 8.69% to RMB 16.05 trillion. Customer deposits stood at RMB 15.29 trillion, an increase of 9.54% from the previous year.