PSBC Continues to Benefit From Solid Rural Credit Demands but Fee Income Growth Under Pressure

Postal Savings Bank of China boasts a strong retail deposit base with market share of 9.5% in China. Its strong deposit base was supported by its inherent advantage in the rural banking market because of its long-term operations in postal savings and remittance outlets. It operates the largest branch network, covering all cities and nearly 99% of counties. The strong deposit base does not come without costs. PSBC must pay agency fees to its parent for deposits absorbed through agency outlets that were owned by its parent, which contribute over 60% of total deposits, making its overall funding costs higher than those of the moaty Chinese banks.