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CMB Expands Loans to Small Enterprises

At the joint conference for the presidents of China’s joint-stock commercial banks on September 17, many banks announced small enterprise credit plans, indicating that small enterprise loans are beginning to sail from ‘blue ocean’ to ‘red ocean’.

As China's largest joint-stock commercial bank, CMB embarked on its second reform drive in 2009 to shift its strategic focus to small enterprises, with the aim of strengthening and improving the corresponding financial services. 

Since its establishment in 2008, CMB’s small enterprise credit center has grown rapidly. The center has provided loans to small enterprises totaling over RMB10 billion with a loan balance exceeding RMB38 billion.

The China Banking Regulatory Committee (CBRC) highly values CMB’s exclusive small enterprise loan model, and is promoting the model to other banks in China.
Lending to small enterprises gathers momentum 

Currently, CMB’s small enterprise credit center has 12 regional centers and 36 sub-centers in over 30 counties and cities spread over 7 provinces. Over two-thirds of these branches are located in towns and counties, some inside specialist markets. 

The center employs a team of 650 professionals, over 90 percent of whom work on the front line, such as key credit reviewers, to expedite credit services for small enterprises.

According to CMB’s mid-2012 report, the bank occupies half of the SME loan market, with non-interest income accounting for a growing percentage of its total revenue. By the end of June 2012, small enterprise loans represented 56.29 percent of its total loans. Non-interest net income accounted for 22.71 percent of its total net operating revenue, up 1.36 percent from 2011.

Ma Weihua, CMB’s president and CEO, stated, “During the second half of the year, we will continue to expand our small and micro enterprise business to accelerate the second reform and respond to new challenges.”

Credit Center: An Incubator

Over the four years since its inception, CMB’s small enterprise credit center has financed over 10,000 enterprises employing a total workforce of 2 million people, confirming its position as the small enterprise incubator. In particular, CMB has helped many small enterprises weather the global financial crisis. 

The center currently serves more than 6,000 enterprises, which average a loan balance of around RMB6 million, with the smallest loan measured in hundreds of thousands yuan. Over 80% of these enterprises are based in conventional manufacturing, wholesale and retail sectors. In recent years, the center is branching out into emerging sectors such as modern logistics, agriculture, and high technology. 

Small enterprises have trouble obtaining finance largely due to a market information gap. Specifically, they don’t know how to obtain loans from banks and banks don’t know which enterprises need loans. 

To bridge the information gap, the credit center has increased resources, strengthened cooperation with government departments, associations of industry and commerce, chambers of commerce, and trade associations to champion the service model of partnering with small enterprises from infancy. 

Launched across China, CMB's ‘Partnership Project’ currently offers financing and policy consultation services for small enterprises. Its ‘Family of Partners’ platform has attracted over 5,000 members and, through 300 promotional activities, served more than 30,000 small enterprises. 

Geared to the financial requirements of small enterprises, CMB has customized a finance supermarket that comprises 30 credit products in 5 series.

Contributing to society

As the smallest ingredient, small enterprises form the foundation of China’s healthy economy. Therefore, CMB is expanding into the area of small enterprise loans for its own business needs and also as a way to fulfill its social responsibility. 

According to head of the small enterprise credit center, CMB has remained committed to supporting small enterprises as part to of its social responsibility without profits in mind. During the first three of its four years of operation, the center didn’t make a profit. 

Apart from normal interest, CMB's loans for small enterprises are free of other charges on loan guarantees and financial consultation, helping minimize the financial burden for small enterprises.

According to head of the center, CMB offers the leading rate. The aim of increasing interest increase is to cover the bank’s operating and risk costs, and finance its specialized business division to serve small enterprises on a permanent basis.