Salary Reductions and Workforce Reductions Emerge as Key Themes in the First Half of 2023 for Listed Banks
Based on Wind data, First Financial Daily reveals that although the combined workforce of 42 listed banks has crossed the 2.5 million mark, the year-on-year growth is a mere 1%. Major banks continue to implement workforce reductions, with Industrial and Commercial Bank of China shedding over 9,000 employees within a year.
Furthermore, in the first half of this year, the total compensation for employees across these 42 listed banks amounted to 466.157 billion yuan, marking a 3.37% increase compared to the same period last year. However, this growth rate has nearly halved in comparison to the first half of 2022. Salary hikes for bank employees are becoming increasingly elusive.
In terms of per capita compensation, a noticeable trend is the expanding scope and depth of salary reductions among listed banks. China Merchants Bank, while maintaining its position as the highest-paying bank, now offers an average monthly salary of 53,600 yuan, representing a 2.44% year-on-year decrease. In the first half of 2021, China Merchants Bank had briefly provided an average per capita salary of 58,000 yuan.
“One Bank Reduces Its Workforce by Over 9,000 Employees in a Year”
In terms of employee numbers, Wind data indicates that the total workforce across 42 publicly listed banks has exceeded 2.5 million, with a year-on-year increase of approximately 24,800, marking a growth rate of 1.03%. This growth rate falls short of the 2% increase recorded in the first half of the previous year.
Although most banks are still actively recruiting, the pace of hiring has notably slowed down. Joint-stock banks and certain well-performing city commercial banks have witnessed larger additions to their employee count.
China Merchants Bank stands out in this regard, as its staff numbers have experienced the most significant growth. According to its semi-annual report, as of the end of June 2023, China Merchants Bank had a total of 111,819 employees, including dispatched personnel. This represents an increase from the 103,904 employees reported in the same period the previous year. In other words, over the course of the past year, starting from the second half of the preceding year, China Merchants Bank has added a net total of more than 7,900 employees.
In the previous comparable reporting period (from the second half of 2021 to the first half of 2022), China Merchants Bank experienced a substantial surge, with a workforce increase of 13,800 employees at one point.
“In Terms of Professional Composition, China Merchants Bank Leads in Hiring for Retail Financial Business Roles”
In the aspect of professional distribution, China Merchants Bank continues to be the bank with the highest recruitment numbers, particularly in the field of retail financial services, where they have added a net increase of 5,378 employees. This figure represents a decrease from the 9,460 employees added in the previous reporting period. Additionally, they have augmented their workforce by a net total of 2,172 employees in operational, management, and operational management roles, while the count of personnel in comprehensive management roles has diminished by nearly a thousand.
Furthermore, Ping An Bank has increased its workforce by more than 3,300 employees, ranking second only to China Merchants Bank. Several other banks, including Ningbo Bank, Zhejiang Commercial Bank, Jiangsu Bank, Hangzhou Bank, Nanjing Bank, and CITIC Bank, have seen net increases of over 2,000 employees each. Minsheng Bank, Bank of China, Industrial Bank, Shanghai Rural and Commercial Bank, Postal Savings Bank, Everbright Bank, Beijing Bank, and Construction Bank have each added approximately 1,000 employees.
Among the 42 listed banks, only 8 have experienced reductions in their workforce. Notably, two major banks, Industrial and Commercial Bank of China (ICBC) and Agricultural Bank of China, have witnessed the most significant decline in employee numbers since the latter half of the previous year.
As of the end of June this year, ICBC had a total of 415,719 employees, compared to 424,962 employees at the end of June the previous year, resulting in a reduction of more than 9,000 employees within a year. Agricultural Bank of China, the largest bank in terms of workforce in the country, has also begun the process of downsizing. According to their interim report, as of the end of June 2023, the bank had a total of 444,932 employees, reflecting a year-on-year reduction of more than 5,300 employees.
“Declining Growth Trends in Employee Compensation”
While the financial reports of publicly listed banks do not explicitly disclose the total sum of employee compensation, it can be roughly estimated using a formula that considers cash payments to employees and changes in payable employee compensation balances over time. This approach provides an approximate measure of overall compensation levels.
Semi-annual reports indicate that during the first half of this year, the combined employee compensation across 42 listed banks amounted to 466.157 billion yuan, reflecting a 3.37% increase compared to the same period last year. However, this growth rate has nearly halved in comparison to the first half of 2022. In fact, since 2021, the total compensation for listed banks has continued to increase positively, but the pace of growth has consistently slowed.
In the first half of this year, only 11 listed banks managed to achieve double-digit growth in their compensation, which is four banks less than the same period last year. Notably, in the first half of 2021, over half of the listed banks experienced double-digit growth in total compensation. This trend underscores the increasing challenge of securing salary increases for bank employees due to ongoing pressure from narrowing net interest margins.
These 11 listed banks include Changshu Bank, Zhejiang Commercial Bank, Zhengzhou Bank, Changsha Bank, Beijing Bank, Rui Feng Bank, Suzhou Bank, Nanjing Bank, Chengdu Bank, Zhangjiagang Bank, and Xiamen Bank. Most of these banks fall into the category of city and rural commercial banks, which typically have lower baseline compensation levels. Among them, Changshu Bank and Zhejiang Commercial Bank reported total compensation increases exceeding 20%.
In the realm of state-owned and joint-stock banks, Industrial Bank has outpaced China Merchants Bank to become the bank with the highest growth rate in total compensation for the first half of the year, recording a year-on-year increase of 7.54%, while China Merchants Bank’s total compensation increased by only 4.99%.
Furthermore, China Bank recorded a 5.28% year-on-year increase in total compensation, ranking first among the six major banks. Meanwhile, Industrial and Commercial Bank of China (ICBC) displayed the lowest increase at 1.18%. For Ping An Bank, which reported negative growth in total compensation in the first half of last year, the first half of this year saw only a marginal increase of 0.38%.
Worth noting is the fact that among the 42 publicly listed banks, eight of them experienced a year-on-year decrease in their total compensation, including three joint-stock banks: Huaxia Bank, Shanghai Pudong Development Bank (SPDB), and China Everbright Bank.
In the first half of the previous year, China Everbright Bank reported a 5% year-on-year decline in its semi-annual total compensation. This trend continued into the current year, with a 5.83% decline in the first half. The semi-annual report reveals that China Everbright Bank achieved an operating income of 76.52 billion yuan in the first half of this year, marking a 2.47% year-on-year decrease. This includes net interest income of 54.733 billion yuan, reflecting a 3.43% year-on-year drop, and net fee and commission income of 13.445 billion yuan, down by 9.37% year-on-year.
Joint-stock banks have maintained their course of implementing salary reductions.
When looking at per capita compensation, the first half of this year has witnessed two significant developments. First, there has been an expansion in the number of listed banks reducing salaries, and these reductions have become more pronounced. Second, only a limited number of city and rural commercial banks, which historically had lower per capita compensation levels, have increased their salaries. However, these increases are relatively modest when compared to previous years.
Indeed, the trend of salary reductions in the financial sector has gained momentum, and coupled with the challenges faced by publicly listed banks in the first half of this year, it has led to further declines in compensation trends.
Data from Wind shows that among the 42 publicly listed banks, 17 of them experienced a decrease in per capita compensation during the first half of the year. This represents an increase from the 11 banks that faced a similar situation during the same period last year.
Notably, China Merchants Bank has once again reduced salaries, with a per capita compensation of 321,700 yuan in the first half of the year, marking a 2.44% year-on-year decline. This translates to a monthly salary of 53,600 yuan, maintaining its position as the leader in the compensation rankings. In the first half of 2021, China Merchants Bank had a per capita compensation of 58,000 yuan.
Over the past two years, Jiangsu Bank, which emerged as a surprising contender in per capita compensation, ranks second with a per capita monthly income of 51,100 yuan. However, per capita compensation experienced a significant year-on-year decline of 10.42%.
Ping An Bank, which had previously held the top two spots in per capita monthly salary rankings alongside China Merchants Bank, has also joined the trend of salary reductions. In the first half of the year, its per capita compensation amounted to 256,400 yuan, equivalent to a monthly salary of 42,700 yuan. In the first half of 2021, Ping An Bank had a per capita monthly compensation of 53,000 yuan. This means that employees at Ping An Bank have seen a reduction of 10,000 yuan in their monthly income over the course of two years.
In contrast, compensation in state-owned banks has remained relatively stable, with per capita compensation ranging from 24,000 to 28,000 yuan in the first half of this year, and year-on-year growth rates ranging from 2.4% to 2.7%.
Among city and rural commercial banks, Changshu Bank, Ruifeng Bank, Suzhou Bank, and Zhengzhou Bank achieved double-digit growth in per capita compensation in the first half of the year. On the other hand, Jiangsu Bank, Hangzhou Bank, Shanghai Rural and Commercial Bank, Ningbo Bank, and Shanghai Bank witnessed double-digit declines. Shanghai Bank experienced the most significant decline, with a 22.54% decrease in per capita compensation during the first half of the year.
In summary, the average semi-annual per capita compensation across the 42 publicly listed banks stands at approximately 185,900 yuan, equivalent to a monthly salary of 31,000 yuan, remaining nearly consistent with the same period last year.