In recent years, both new Internet financial institutions and traditional banks have taken personal online credit loans as a power source, combined with the advantages of Internet technology to realize the competition for the long-tail market.

Internet credit loans rely on advances in technologies such as big data, artificial intelligence, cloud computing and blockchain, and on the gradual improvement of the credit system, with advantages such as high efficiency, good experience and standardization. The products include credit cards, personal consumption loans, cash installments and so on, and have developed rapidly in recent years.

Zero One Finance found that the number of more than 1,000 rural commercial banks (hereinafter referred to as "agricultural and commercial banks"), although subject to the geographical limitations of the business, but made some attempts in the personal network credit business. In the WeChat ecosystem, you can also see the loan products of agricultural commercial banks.

This paper will take the personal credit business of rural commercial banks as an entry point, through "What is the current situation of rural commercial banks? How is the personal credit income of rural commercial enterprises? How do rural commercial banks carry out personal online credit business?" And so on questions analyzed out.

I, the current situation of rural commercial banks

Rural commercial banks (hereinafter referred to as "rural commercial banks") originated from the rural credit unions, the end of 2000, the first batch of pilot rural commercial banks were established in Jiangsu Province. Compared with other banks, rural commercial banks are subject to stricter restrictions on cross-regional operations.

On January 14, 2019, the CBRC issued the "Opinions on Promoting Rural Commercial Banks to Stick to Their Positioning and Strengthen Governance to Enhance Their Financial Service Capability" No. 5 (hereinafter referred to as the "CBRC No. 5"), stating, "Rural commercial banks? s strictly and prudently carry out integrated and cross-regional operations. In principle, their institutions do not go out of the county (district), the business does not cross the county (district)." However, on April 8 of the same year, Changshu Rural Commercial Bank (hereinafter referred to as "Changshu Bank", 601128. SH) won the first investment management village bank license, rural commercial banks across the region business has a new model of compliance.

Rural commercial banks are generally set up in two ways: "rural credit unions - rural commercial banks" and "rural credit unions - rural cooperative banks - rural commercial banks". As the first batch of pilot rural commercial banks, Jiangsu Province has the most listed rural commercial banks as of now, *** counting 6. According to Zero2Wise, as of April 12, 2019, *** there are 10 rural commercial banks that have landed on the capital market, of which 7 chose to be listed on the a-share market and 3 chose to be listed on the Hong Kong stock market (see Table 1).

Table 1 List of Listed Rural Commercial Banks (as of April 12, 2019)

After the intensive listing in 2016 and 2017, agribusiness banks fell into silence in 2018. in the first quarter of 2019, Zijin Bank and Qingnong Bank were listed one after another. Qingnong Bank is the first non-Jiangsu-based agribusiness bank among the a-share listed agribusiness banks.

(1) In 2018, agricultural and commercial banks were mainly located in Shandong, Hunan and Henan.

Rural commercial banks can be categorized into provinces, cities and counties. There is usually one provincial-level rural commercial bank in each province or municipality directly under the central government such as Beijing, Shanghai, Tianjin and Chongqing. According to Figure 1, as of the end of 2018, Shandong, Hunan and Henan had the largest number of agribusiness banks, with 110, 101 and 95 respectively. Agricultural less there is only one agribusiness bank in Beijing and Shanghai.

The distribution number of rural commercial banks is related to the local agricultural situation and population:

1. In large agricultural provinces, there are generally more rural commercial banks.wind data show that as of the end of 2017, the total agricultural output value of Shandong, Hunan and Henan was 440.32 billion yuan, 259.76 billion yuan and 455.27 billion yuan, respectively; Beijing and Shanghai was 12.98 billion yuan and 14.64 billion yuan.

2. When the resident population is large, the number of rural commercial banks is generally high. According to the Zero One Think Tank's estimation, the average number of rural commercial banks in each province/municipality/autonomous region across the country (resident population/number of rural commercial banks), a rural commercial bank generally serves the local million (Zero One Think Tank's note: the median number of rural commercial banks in 2017 was 974,800, i.e., a rural commercial bank serves 974,800l

With the introduction of the regulatory policy, the number of rural cooperative financial institutions that serve the in the county economy, rural cooperative financial institutions are gradually being unified. According to the recommendations of the CBRC in 2011, all existing rural cooperative banks (hereinafter referred to as "rural cooperative banks") should be converted into rural commercial banks, and rural credit unions are encouraged to be converted into rural commercial banks. Therefore, before the introduction of new relevant policies, the banking model to serve the county economy should be reformed to "rural credit unions - rural commercial banks, rural cooperative banks, rural cooperatives - rural commercial banks".

The number of rural commercial banks, rural credit unions and rural cooperative banks has changed during the restructuring process. Data from the CBRC show that as of December 31, 2018, there were 1,397 rural commercial banks, 30 rural cooperative banks and 812 rural credit unions nationwide***, accounting for 30.45%, 0.65% and 17.70% of the legal number of the banking industry (4,588), with year-on-year increases and decreases of 10.70% and -9.00%, respectively.

(3) Policies related to agribusiness banks: serving local areas and trans-regional on merit.

Since the original rural financial institutions have limitations such as geographically dispersed distribution, limited risk control capability, and homogenization of products and services, the establishment of rural commercial banks is aimed at reforming the existing management system of rural financial institutions. For cross-regional business, the regulatory aspects may show a differentiated management system.

In the face of all rural commercial banks, the CBRC pointed out that "rural commercial banks should be strictly prudent to carry out integrated, cross-regional operations". But for high-quality rural commercial banks, the CBRC is paid across regions. The CBRC in the "Notice on Doing a Good Job in Rural Financial Services in 2016" (hereinafter referred to as "CBRC No. 26") and the "Notice on Carrying Out the Pilot Work of Investment-Managed Village Banks and "Multi-County, One-Row" Village Banks" (hereinafter referred to as "CBRC No. 3"), stated that "rural commercial banks should strictly and prudently carry out consolidation and cross-regional operation". The "CBRC No. 3") states that it "supports high-quality rural commercial banks to set up branches off-site, or commercial banks meeting certain conditions to operate, manage, and merge and acquire off-site village and town banks through a newly-established or existing village and town bank."

Table 2 Incomplete statistics of relevant policies of rural commercial banks (as of April 12, 2019)

II. What is the personal loan income of rural commercial banks?

According to the 2018 annual report, rural commercial banks

showed varying degrees of growth in revenue and net profit.

(A) Chongqing, Guangzhou agribusiness banks had the largest revenue scale and net profit on attribution in 2018

Listed agribusiness banks had total operating revenue of 76.468 billion yuan in 2018, up 20.38% year-on-year. Among the banks listed in the annual report of agricultural and commercial banks in 2018, the year-on-year growth in total operating income increased by more than 20% Chongqing Rural Commercial Bank (29.93%), Jiangyin Bank (27.09%), Zhangjiagang Bank (24.24%) and Qingnong Bank (22.75%), which showed a relatively large increase compared with 2017. Among the listed agribusiness banks, Chongqing Rural Commercial Bank had the largest revenue size and the fastest growth in 2018. Chongqing Rural Commercial Bank and Guangzhou Agricultural and Commercial Bank had the largest revenues of 26.092 billion yuan and 15.377 billion yuan, respectively, with year-on-year growth of 29.93% and 14.08%.

Figure 2 Listed agribusiness banks 2016-2018 operating income (in billion yuan)

As of the end of 2018, listed agribusiness banks are all generating profits, in addition to Jiutai Farmers and Merchants Bank's net attributable profit decreased by 22.94% year-on-year, and the rest of the farmers and merchants banks continue to grow to varying degrees. Among the increase in 10% were Changshu Bank (17.53%), Guangzhou Agricultural and Commercial Bank (14.32%), Qingnong Commercial Bank (13.23%) and Zijin Bank (10.21%). Among them, there are two agricultural and commercial banks with net attributable profits of more than 5 billion yuan, namely Chongqing Rural Commercial Bank and Guangzhou Agricultural and Commercial Bank, with net attributable profits of 9.058 billion yuan and 6.526 billion yuan respectively.

Figure 3 Listed agribusiness banks' net attributable profit in 2016-2018 (in billions of yuan)

(ii) The balance of personal loans of agribusiness banks has been increasing year by year

As of the end of 2018, listed agribusiness banks issued a total of 1.41 trillion yuan in total loans.In 2016-2018, the total amount of loans of agribusiness banks has been maintaining the growth trend, with a compound annual growth rate of 18.18%.

Figure 4 Total loans of listed agribusiness banks (in billions of yuan)

The balance of personal loans has continued to grow. As of the end of 2016-2018, the compound annual growth rate (CAGR) of personal loan balances of listed agribusiness banks all exceeded 10%, with Sunon Bank and Zhangjiagang Bank growing the fastest, with CAGRs of 59.75% and 45.13% respectively.

Figure 5 Personal Loan Balance of Listed Agricultural and Commercial Banks, 2016-2018 (as of April 12, 2019) Unit: billion yuan

Note: CAGR is the compound annual growth rate of personal loan balance

Personal loans are an important part of total loans, accounting for one-third. Among the listed agribusiness banks, the top three in terms of personal loan share are Changshu Bank (51.02%), Chongqing Rural Commercial Bank (34.96%) and Qingnong Commercial Bank (27.56%).

Figure 6 Percentage of personal loans of listed agribusiness banks (as of April 12, 2019)

Third, how do agribusiness banks conduct personal online credit business?

Agribusiness banks generally have a more adequate volume of deposits, and how to lend is a bigger problem for them. Convenient lending process is one of the ways that agribusiness banks try. Some agribusiness banks have opened personal online small loans business. Users in the location of the agribusiness bank outlets for the bank card, the bank has a loan demand for the cardholder application for review. The review can be realized through the bank branch or online. Among the materials to be provided generally include proof of identity, proof of employment (pay slips, provident fund), proof of residence and so on.

(a) personal online borrowing necessary conditions: need to hold the corresponding agricultural and commercial bank card to open the card needs to be in the local bank branch

In order to realize the online credit and other businesses, agricultural and commercial banks across the region to set up outlets usually have three modes:

1, the establishment of inter-regional sub-branches. Sunon Bank (formerly known as Wujiang Agricultural and Commercial Bank) was the first in China to set up an off-site branch. Sunon Bank established an off-site sub-branch in Chibi City, Hubei Province in 2009. By the end of 2018, Sunon Bank had opened branches in off-site locations in Anhui, Hubei and other provinces and cities.

2. Establishment of cross-regional village banks. Larger agribusiness banks usually hold several village and township banks. For example, as of the end of 2018, Changshu Bank had 30 village and town banks (Xingfu system) under its umbrella, distributed in Hubei, Jiangsu, Henan, Yunnan and other provinces.

3, the establishment of financial subsidiaries, consumer finance companies and other financial institutions. in January 2017, Sunon Bank applied for funding to set up a consumer finance company invested in the Hengqin New District of Zhuhai, Guangdong Province, but has not yet been approved.

In December 2018, Guangdong Shunde Agricultural and Commercial Bank became the first agricultural and commercial bank to publicly affirm its investment in the establishment of a financial management subsidiary, but it has not yet been approved.

Except for the third model, which appeared late and has no success stories for now, borrowers in other places can apply for debit or credit cards at agribusiness bank branches through the first and second models.

(B) Weixin Bank: loan business diversion is the main

Table 3 Listed agribusiness bank online business in 2017 Unit: 10,000

Foshan Agricultural and Commercial Bank's official website shows that the application for Yue Nong e loan needs to be aged 22-55 years old and have a public provident fund, social security, payday loan or home loan customers in the bank. It can be seen that the online loan application materials of the Agricultural and Commercial Bank of China are the accumulated information of previous users, which is the result of linking the information of the business department responsible for card, five insurance and social security, housing loan and the loan department.

Table 4 Incomplete statistics on personal consumer loan products of Shanghai Agricultural Commercial Bank

Note: The blank cells in the table are not directly mentioned as materials required for the corresponding products

(d) Online loan products are strictly audited by the limited scope of the loan audience

Agricultural commercial banks are in the experimentation stage of the Internet lending business. According to Zero-One Think Tank's online survey of 14 agribusiness banks, agribusiness banks WeChat bank loan process is generally WeChat users in the submission of loan applications (fill in the information: name, cell phone number, ID card number, the purpose of the loan, location, etc.), the bank's customer service manager will let the user to the appropriate outlets to submit materials for review and then lending. The online audit of the Internet loan product is relatively small. According to zero one think tank incomplete statistics, the table has the Internet personal loan products 14 agricultural and commercial banks a **** 5, respectively, Zijin Bank (tax micro-credit), Chongqing Rural Commercial Bank (Chongqing Express Loan), Changshu Bank (Nongxiang Loan), Shanghai Agricultural and Commercial Bank (Xin E Loan) and Shandong Agricultural Credit Union (letter e loan).

Table 5 WeChat Banking, Mobile Banking and Official Website Loan Business (Incomplete Statistics)

The personal online loan business of agricultural and commercial banks is not yet perfect, mainly due to policy and technical difficulties. Considering that policy is an uncontrollable factor, agribusiness banks are paying more and more attention to system and personnel technical ability improvement. In addition to forming their own technical team, agribusiness banks also try to cooperate with financial technology companies.

Four, conclusion

Agribusiness bank appeared late, is the product of the reform of the original rural financial institutions. With the policy to promote, agricultural and commercial banks or with a large unity to stick to the end. But the CBRC No. 5 so that the funds, business continues to be "siege" of the trouble, but the establishment of managed village bank shows that the earlier introduction of the Office of the CBRC No. 3 is still playing a role, eligible agricultural business across the region is recognized and encouraged.

The geographical restrictions have implications beyond the offline. Well-qualified agribusiness banks can expand their operations by opening sub-branches and village banks in other places. At the same time as the geographical restrictions are partially opened, the variety of personal online credit products of agricultural and commercial banks has increased, and the model has changed from "purely offline" to "purely online".