The possibility that employment has peaked at the firms that are the world’s biggest providers of banking jobs was highlighted when China’s four biggest banks reported that staff numbers fell by the most in at least six years in the first half.

Earnings filings showed that 1.62 million workers at Agricultural Bank of China Ltd., Industrial & Commercial Bank of China Ltd., China Construction Bank Corp. and Bank of China Ltd. were left and that there had been a decline of 1.5 percent from the end of last year. The employees slipped below half a million at the Agricultural Bank, the No. 1 bank employer.

While analysts at firms including BOC International Holdings Ltd. and DBS Vickers Hong Kong Ltd. say changes to how banking is done will limit prospects for increases even as a fall in the first half is not unusual, the 25,000-job decline is the biggest since at least 2010.

“Chinese banks went through years of expansion, adding physical outlets that helped to push their staff numbers to a peak,” said Polar Zhang, a Beijing-based bank analyst at BOC International. Due to technological advances and cost cutting, he expects the workforce to “dwindle” further.

Since the global financial crisis, staff strength and costs have been cut in revamp attempts by lenders from Citigroup to Deutsche Bank AG.

Chinese banks are under pressure from an economic slowdown and a rising quantity of bad loans even while the banks have avoided the multi-billion dollar fines for compliance breaches that have weighed on their international counterparts. In recent online and mobile players like Zhejiang Ant Small & Micro Financial Services Group — also known as Ant Financial – and Tencent Holdings Ltd. have eaten into the businesses of the banks. Added to this is the deregulation of the industry by the government have resulted in falling margins.

According to Shujin Chen, a Hong Kong-based analyst at DBS Vickers Hong Kong, by not replacing staff who leave, the Chinese lenders have generally managed to reduce numbers.  She added that less staff would be needed by the banks as lenders developed robots that would interact with customers and as artificial intelligence mobile transactions start to play a bigger role. She also said that search of better pay is also taking workers away from banks.

There is also a definite pressure on pay and pay hikes at the banks beside a reduced number of workers, the first half data also indicated. Compared to a year earlier, there was a fall of 2.6 percent in the combined staff compensation costs — including salaries, bonuses, allowances and post-employment benefits – for the big four Chinese banks. This decline was to the tune of 22 percent at the mid-sized China Minsheng Banking Corp.

Wei Hou, a Hong Kong-based analyst at Sanford C. Bernstein & Co., wrote in a note that “banks have been pushing even harder in cost optimization,” due to the pressures from fFlat revenue and rising pressure on their asset quality.

(Adapted from CNBC)

Categories: Economy & Finance, Uncategorized