The development roadmap of rural commercial banks in China
Published by Deloitte China Financial Services Industry Center of Excellence (FSICoE)
Since the reform, China's rural commercial banks have developed by leaps and bounds, with a surge in the number of banks, the scale of assets and after-tax profits, and played an increasingly important role in the rural financial system. Meanwhile, benefited from improvements in the ability to operate and to manage risk, rural commercial banks are also experiencing a decrease in non-performing loan ratio. However, they are now faced with risk management problems that cannot be ignored as the growth of domestic economy slows, and with more and more fierce competition. We notice that China's rural commercial banks are at a pivotal moment for strategic transformation.
Currently, rural commercial banks have formed the tendency of diversification, facing multiple challenges from both external and internal environment. On one hand, they face challenges of a slowing growth rate, limited growth in local market, and eroded market share caused by industry competition. On the other hand, rural commercial banks lag behind other types of commercial banks in profitability and need to improve the revenue structure, asset structure and operating efficiency. Meanwhile, they should also reinforce internal management, focus on organizational structure and human resource management, improve the ability of risk management and guarantee the implementation of strategic plan and business transformation.