New | Bank of Communications’ Q3 net profit rises as restructuring spurred units to earn more fees
BoCom was the first Chinese bank to reform its business model
Bank of Communications’ third-quarter net profit rose, as a 2015 restructuring spurred its business units to earn more fees and commissions, allowing the lender to reduce its reliance on interest rate spreads for income.
Net profit rose 1.4 per cent to 15 billion yuan in the three months ended September, from last year’s 14.8 billion yuan. Fees and commissions dipped 1.3 per cent to 7.93 billion yuan, while net interest income fell 11.6 per cent to 32.6 billion yuan, according to its filing.
Bank of Communications was the first lender in mainland China to turn around the old headquarter - local branch model, reorganising its businesses and reporting lines into six standalone units. The head of each unit has individual profit and loss accounts to answer to, clear definitions of their target client groups, and financial and human resources.
“The first reformers are always the first to benefit,” Huatai Securities’ analyst Luo Yi said.
The bank’s six units cover financial markets, precious metal trading, offshore business, bills financing, asset management and credit cards. It also has four sub units under them to run investment banking, custody, private banking and its Beijing business.
