As the annual reports of listed banks are disclosed, the operating conditions of the banking industry last year are laid bare.

As of April 1st, 21 listed banks on the A-share market have disclosed their annual reports for the year 2023, including 13 national commercial banks and 8 regional banks. Collectively, the total operating income of these 21 banks fell by 4% year-on-year. Thanks to the counterbalancing effect of provisions, the net profit attributable to the parent company barely increased by 1.58%.

At the annual performance briefings, bank management teams commonly mentioned the narrowing profit margins in the present and future, as well as their strategies to cope with this.

Salary reductions and layoffs have become the practical choices for banks to "tighten their belts." According to First Financial Daily's statistics based on Wind data, last year, the total compensation of the 13 national commercial banks was 869.668 billion yuan, only growing by 2.32% compared to the same period in 2022. This growth rate is more than 60% lower than the 5.85% increase in 2022.

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In terms of average compensation per employee, China Merchants Bank still ranks first, at 573,800 yuan, equivalent to an average monthly salary of 47,800 yuan, which is almost unchanged compared to the previous year. In 2021, the average monthly salary at China Merchants Bank had once reached as high as 58,000 yuan.

The "Galaxy Bank" has reduced its workforce by 42,500 over seven consecutive years.

Regarding the number of employees, Wind data shows that the total number of employees across the 13 national commercial banks reached 2.2728 million, an increase of about 32,000 people year-on-year, a growth rate of 1.42%. Among them, the total number of employees in 5 banks decreased year-on-year, while it increased in 8 banks.

Industrial and Commercial Bank of China (ICBC) had the largest reduction in workforce last year, with over 8,000 fewer employees in 2023. In fact, since 2016, ICBC has been continuously reducing its employee and branch numbers. The number of employees has shrunk from a peak of over 460,000 to less than 420,000 in 2023, a reduction of 42,500 over seven years, averaging about 6,000 layoffs per year; the number of branches also decreased from 17,200 in 2016 to 16,300 in 2023, a reduction of over 900.

Industrial Bank had the highest reduction in workforce last year, with the total number of employees decreasing by 3,271, a drop of nearly 5%. Additionally, both Agricultural Bank of China and Ping An Bank have laid off over a thousand employees each.

Agricultural Bank of China is also a major reducer of its workforce in recent years. By the end of 2023, the total number of employees at the Agricultural Bank of China was 450,000, a reduction of 45,700 compared to 2016, equivalent to an average of about 6,500 layoffs per year.In terms of staff expansion, CITIC Bank had the highest number of new recruits last year. By the end of 2023, CITIC Bank had a total of 66,900 employees of all types, an increase of 5,788 people compared to the end of 2022.

Although the financial reports of listed banks do not directly disclose the total compensation paid to employees, it is possible to roughly estimate the overall compensation level by calculating using the method of "cash paid to employees and for employees + the balance of employee compensation payable at the end of the period - the balance of employee compensation payable at the beginning of the period".

Data shows that in 2023, the total compensation of the 13 listed banks was 869.668 billion yuan, a year-on-year increase of 2.32%, with the growth rate narrowing by more than 60% compared to 2022. Since 2021, although the total compensation of listed banks has continued to grow positively, the growth rate has been continuously falling, and the decline in 2023 was particularly noticeable.

Last year, among these 13 banks, only one listed bank, namely Zheshang Bank, was able to maintain double-digit growth in total compensation, with a year-on-year increase of 14.72%. In 2022, there were 3 banks, in addition to Zheshang Bank, there were Industrial Bank and China Merchants Bank.

In 2023, the total compensation of China Merchants Bank only increased by 4.79% year-on-year. The total compensation of CITIC Bank, Industrial Bank, Everbright Bank, and Ping An Bank even shrank, which had not happened before. Among them, Ping An Bank's total compensation decreased by 5.64% year-on-year, the largest decline.

It can be seen that against the background of the continuous narrowing of net interest margins and the significant increase in banking operational pressure, salary increases have become a "thing of the past".

CITIC Bank's salary reduction is nearly 9%

Looking at the per capita compensation, there were two major changes in 2023: First, the median growth rate of per capita compensation is declining, especially the large salary reduction of shareholding banks that have maintained high compensation in the past; Second, although the compensation level of state-owned banks is lower than that of shareholding banks, they are more resilient, and even in the context of declining revenue, they can still achieve a slight increase.

In 2023, the per capita compensation of the aforementioned 13 listed banks was 382,600 yuan, among which, the highest per capita compensation was still China Merchants Bank, at 573,800 yuan, equivalent to a monthly salary of 47,800 yuan, a year-on-year increase of 1.62%.

Next is Industrial Bank, with an annual per capita compensation of 571,800 yuan, equivalent to a monthly salary of 47,700 yuan, a year-on-year increase of 4.55%. It is worth noting that in the past few years, Industrial Bank's per capita compensation has never been in the top three, and the total compensation in 2023 even slightly decreased by 0.34%, while the significant increase in per capita compensation is mainly due to the significant reduction in the number of employees last year.CITIC Bank ranks third with an annual average compensation of 569,700 yuan per person, equivalent to a monthly salary of 47,500 yuan, a significant year-on-year decrease of 8.77%, which means an average of 4,600 yuan less per month, making it the bank with the largest compensation decline among the 13. In the past two years, CITIC Bank's average compensation has consistently been among the top, competing neck and neck with China Merchants Bank, and in 2022, it once surpassed China Merchants Bank, reaching an average of 624,500 yuan per person. Last year, not only did CITIC Bank's total compensation decrease, but it also had the largest increase in the number of employees, leading to a noticeable decline in the average.

State-owned banks generally have a monthly average compensation ranging from 26,000 to 36,000 yuan. Among them, Bank of Communications has the highest annual average compensation at 435,700 yuan, equivalent to a monthly salary of 36,000 yuan; Postal Savings Bank of China has the lowest annual average compensation at 327,400 yuan, equivalent to a monthly salary of 27,000 yuan.

In terms of compensation growth, state-owned banks had a significantly higher growth rate than joint-stock banks last year. On one hand, the average compensation in state-owned banks is lower, leaving more room for increase; on the other hand, in the current environment where interest margins continue to narrow, state-owned banks show greater resilience in development.

Last year, Bank of China's average compensation increased by 5.84% year-on-year, ranking first among the 13 banks; the average compensation of Agricultural Bank of China, Industrial and Commercial Bank of China, and China Construction Bank increased by 3.09%, 2.07%, and 1.89% respectively.

In fact, the average is merely a reference value. In the total compensation package of banks, a significant portion is taken by the management such as directors and supervisors, leaving the compensation for ordinary employees below the average.

At the same time, what is more important for bank employees is that not only is there no hope for a pay raise, but the performance-based pay they receive may even be subject to recovery. Recently, with the release of the annual reports of listed banks, many banks have disclosed the situation of performance compensation recovery and deduction in their reports.

For example, China Merchants Bank's annual report shows that during the reporting period, 4,415 employees were subject to performance compensation recovery and deduction, with a total amount of 43.29 million yuan recovered. Bank of China executed recovery and deduction for a total of 2,059 individuals, with a combined amount of 22.75 million yuan.