Some of China’s biggest banks have shed around 35,000 employees this year and cut average salaries as they sought to reduce costs amid stagnant revenue growth, a media report said on Wednesday.
Bank profits were essentially flat in the first half of the year as lenders struggled with shrinking net interest margins and rising bad loans. With top-line growth sluggish, lenders turned to cost-cutting, the Financial Times said in the report.
Of China’s 19 listed banks, seven reported declines in total employment at the end of June, compared to six months earlier.
The group – which includes five of the six largest banks by assets – cut a total of 34,691 jobs in the period, according to Wind Information, which compiles data from the banks’ quarterly financial statements.
For the full group of listed banks, employment fell by a net 20,791 workers, the Financial Times reported.
The cuts come as western peers scale back more dramatically. Eleven of the biggest European and US banks cut almost 100,000 jobs in 2015, according to a Financial Times analysis.
“Banks are generally seeing more net interest margin and credit-cost pressure, so they need to control operating costs more tightly if they want to scrape out flat or marginally positive earnings growth,” said Hou Wei, Asia banks analyst at Sanford C. Bernstein in Hong Kong.
Beyond cost-cutting, the industry shift towards digital banking is also driving reductions in staff.
According to Liao Zhiming, bank analyst at TF Securities in Beijing, more than 90 per cent of transactions at most lenders are now done online.
“As commercial banks’ IT systems and electronic banking, – especially mobile banking – get perfected, the digital substitution keeps rising,” the Financial Times quoted Liao as saying.