The six major banks have all gathered at AIC, and PSBC has invested 10 billion to establish China Post Investment

The 9th financial asset investment company (AIC) in the market has officially emerged.

On July 16, PSBC announced plans to invest 10 billion yuan to establish China Post Financial Asset Investment Co., Ltd. (hereinafter referred to as "China Post Investment"), as a wholly-owned first-level subsidiary of PSBC, with specific business scope subject to regulatory approval.

Currently, there are 5 major banks in the market under AIC, including Industrial, Agricultural, China, Construction, and Transportation banks, along with 3 joint-stock banks AICs from Industrial Bank, CITIC, and China Merchants Bank; once the qualification for PSBC Investment's establishment is approved, the total number of AIC companies in the industry will expand to 9.

The formal entry of the last state-owned major bank signifies that AIC is gradually stepping onto a larger stage.

At its inception, AIC was purely a tool for major banks to convert debt into equity, aimed at resolving the asset quality risks accumulated by major banks after the subprime mortgage crisis;

However, with the expansion of the pilot scope for equity investment and adjustments to funding usage restrictions since 2024, the positioning of AIC has shifted from a risk mitigation tool to a stepping stone for the banking industry to open up mixed business paths such as equity investment.

At a press conference held by the State Council Information Office in May this year, Li Yunze, director of the National Financial Regulatory Administration, revealed that to better leverage equity investment in supporting technological innovation, the administration will initiate the establishment of AIC entities to expand to national commercial banks;

Subsequently, AICs under banks such as Industrial Bank, CITIC, and China Merchants Bank were successively approved for preparation, and PSBC also announced its initiative.

PSBC stated that the establishment of AIC is an important measure to respond to the national call and serve the construction of a strong technological nation, which is beneficial for the bank to enhance its comprehensive service capabilities and further support technological innovation and private enterprises.

Xinfeng noted that due to the 10 billion yuan paid-in capital threshold at establishment, and the high reliance on the parent bank for business resource connections in the later stages, the players entering the AIC track are still major banks; the total registered capital of the 9 AICs has approached 150 billion yuan.

From the existing performance, the profit feedback from each AIC to its parent bank is not significant, with the total profit of the 5 major banks' AICs in 2024 amounting to a net profit of 18.354 billion yuan, accounting for less than 2% of the total profit of the parent banks;

The role of AIC still lies more in risk mitigation and leveraging comprehensive benefits, achieving low-cost deposit accumulation and increasing space for fee income.

However, in terms of growth rate, the profit growth rates of Bank of China Asset, ICBC Asset, and Agricultural Bank Asset are 35.74%, 7.24%, and 3.98%, respectively, all significantly ahead of the profit growth rates of their parent banks;

The compound annual growth rate of profits for the 5 major banks' AIC institutions from 2018 to 2024 is as high as 57.93%.

This comes less than a year after the promotion of pure equity investment by AIC from Shanghai to 18 provinces and cities.

In the current context of narrowing net interest margins and weak wealth management, AIC, which further relaxes equity investment business, is still expected to achieve greater profits and provide feedback to its parent banks It is worth looking forward to whether China Post Investment can successfully establish itself in the future, and how it will subsequently benefit its parent bank and leverage comprehensive returns