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Hua Xia Bank sees more revenue from e-banking unit
May 25, 2010 / 10:25 AM / 7 years ago

Hua Xia Bank sees more revenue from e-banking unit

* E-banking to contribute 30 pct of fees incomes in 2010

* About 30 pct clients to use e-banking by year-end

By Michael Wei and Ken Wills

BEIJING, May 25 (Reuters) - Hua Xia Bank (600015.SS), in which Deutsche Bank (DBKGn.DE) is a minor shareholder, aims to steadily boost its revenue from electronic banking, a senior executive told Reuters on Tuesday.

Internet and telephone banking income is expected to account for 30 percent of Hua Xia’s total fees and commissions this year, up from 25 percent in 2009, said Yun Mingqing, chief information officer of the medium-sized Chinese lender.

At present, a quarter of Hua Xia’s clients have opened e-banking accounts, and the ratio will rise to 30 percent by the end of the year, said Yun, adding that it is still far lower than the 50 to 60 percent level that is the average in Western countries.

“Electronic banking is slated to gradually change the way that banks operate, extending effectively their outlets into client’s homes,” Yun said in an interview.

Due to low costs and easy access, electronic banking has been mushrooming in the past decade in China, with most lenders providing online and telephone services that are a boon to their business. Earlier this year, China Mobile (0941.HK), the world’s largest mobile carrier, announced a $5.83 billion deal to acquire 20 percent of Shanghai Pudong Development Bank (600000.SS), in a foray into the lucrative electronic-payment business.

Unlike other players, Hua Xia is looking at electronic banking as a platform to channel existing clients to its business, not as a mix of products, said Yun, who holds a doctorate degree in mathematics.

In addition, the bank is not focused on selling solely electronic banking products to clients. Instead, it integrates e-banking services into solutions it offers, particularly to corporate users, encouraging a steady flow of business in the future.

“Although we won’t say ”no“ to direct income, what we care more about is indirect income and e-banking’s ability to contribute to other business of the bank,” said Yun, who joined in 1998 after holding various positions in different government bodies.

Hua Xia Bank, which has a market value of 8.2 billion yuan

($1.20 billion), posted net profits of 1.3 billion yuan in the first quarter, surging 86 percent from a year earlier. While its fees and commissions climbed 40 over percent to 466 million yuan.

($1=6.828 Yuan)

(Additional reporting by Zhao Hongmei)

((michael.wei@thomsonreuters.com; +8610 6627 1003; Reuters Messaging: michael.wei.reuters.com@reuters.net))

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