The nation’s second-largest lender unveiled a mobile app in September that can process loan applications
for as much as 5 million yuan in two minutes. Construction Bank boosted its small-business lending by 51
per cent last year, more than twice as fast as the industry. The bank charges an average interest rate of 5.3
per cent for one-year loans, slightly above the 4.35 per cent benchmark lending rate, and says defaults have
held at a minuscule 0.3 per cent.
“It’s a profitable business as long as you can keep the risks in check,” says Zhang Gengsheng, a vice
president at Construction Bank in Beijing. “We had suffered huge losses in the past with a bad-loan ratio
running at 8 per cent. But now we’re back in the game.”
While keeping defaults in check may prove more difficult as China’s economy slows, all signs point toward
continued growth in small-business lending. In February, the banking regulator called on state-owned
lenders to boost credit to small companies by at least 30 per cent this year. MYbank is looking to raise about
6 billion yuan, which will more than double its capital to 10 billion yuan and allow it to boost lending,
people familiar with the matter say.
About two-thirds of the country’s 80 million small businesses lacked access to loans as of 2018, according to
China’s National Institution for Finance & Development.
For Zeng Ping’en, who runs a scooter store in Hangzhou with about 1.2 million yuan in annual sales,
MYbank’s lending app has been a game changer. After allowing the bank to access his store’s transaction
data, Zeng has been able to take out small loans to cover short-term cash needs. He pays an annualised
interest rate of about 15 per cent.
“It was unimaginable a few years ago, when no bank would approve my request,” Zeng says. “Now I can
borrow whenever I need to.”
Bloomberg