Here is the translation of the provided text into English: **Investor Network** Zhu Jingkai In recent years, an increasing number of industries have been releasing large models in their respective niches, such as finance, education, healthcare, and more, with a variety of application scenarios.

Nowadays, the use of AI large models has shifted from being a novelty to a common occurrence.

Recently, Zhejiang Network Merchants Bank Co., Ltd. (hereinafter referred to as "Network Merchants Bank") unveiled a financial inclusion solution based on an AI large model, the "Cuckoo" system, at the Bund Financial Forum on Bank Wealth Management and Financial Technology.

The company stated that it can provide new solutions for the working capital management of small and micro enterprises, better supporting the development of inclusive finance, and launched three products: Yu Li Bao, Wen Li Bao, and Yue Li Bao.

Net profit declined by over 30%.

As a first-tier private bank, Network Merchants Bank recently released its performance report for the first half of 2024.

The report disclosed that as of June 30, 2024, Network Merchants Bank's total asset size was 446.292 billion, a year-on-year increase of 5.5%, with loans and advances of 286.691 billion, an increase of 5.95% from the beginning of the year; deposits absorbed were 303.442 billion, an increase of 2.01% from the beginning of the year; operating income was 10.076 billion, a year-on-year increase of 20.58%; net profit was 1.443 billion, a year-on-year decrease of 31.2%.

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The results seem to indicate that Network Merchants Bank is in a predicament of "increasing revenue but not profit."

Wind data shows that as of the first half of 2024, Network Merchants Bank ranks first among private banks in terms of revenue performance, with Sichuan Xinwang Bank ranking second with a revenue of 2.988 billion yuan, a significant gap between the two.

However, WeBank has not yet released its semi-annual report for 2024, and in the 2023 financial report comparison, WeBank's main performance data was significantly ahead of Network Merchants Bank.

Wind data shows that from 2021 to 2023, Network Merchants Bank's operating income was 13.903 billion yuan, 15.686 billion yuan, and 18.743 billion yuan, respectively, showing double-digit growth each year, with net profits of 2.092 billion yuan, 3.538 billion yuan, and 4.203 billion yuan, respectively.

However, according to its 2023 annual performance report, the significant increase in Network Merchants Bank's net profit was mainly due to a large tax refund, with the actual total profit declining by about 10% year-on-year.

It can be seen that both its revenue and net profit show signs of slowing growth, while its non-performing loan ratio has been rising year by year.

From 2021 to 2023, Network Merchants Bank's non-performing loan ratio was 1.53%, 1.94%, and 2.28%, respectively.

Moreover, the provision coverage ratio fell significantly from 363.95% in 2021 to 199.14% in 2023, and the capital adequacy ratio also decreased from 12.50% to 11.30%.

Compared with similar private banks such as WeBank and SuShang Bank, Network Merchants Bank's capital adequacy ratio is also in a relatively disadvantaged position.

This means that Network Merchants Bank's ability to withstand risks in the future will be weakened.

However, Network Merchants Bank is actively taking measures to respond, disposing of billions of non-performing assets through multiple transfers of non-performing asset package income rights.

Public information shows that in 2023, the bank transferred 6.14 billion yuan of non-performing assets at a price of 589 million yuan at the Silver Registration Center.

In April 2024, it transferred the income rights of 359 million yuan of non-performing assets for 28 million yuan.

Shareholder movements are frequent.

As a private bank established with a "golden spoon," Network Merchants Bank has a strong background among its shareholders, backed by Alibaba Group and a group of capital magnates.

Ant Technology Group is the largest shareholder with a 30% stake, followed by Wanxiang SanNong Group, Ningbo Jinrun Asset Management Co., Ltd., Shanghai Fosun Industrial Technology Development Co., Ltd., Hangzhou Hebo Doctor E-commerce Co., Ltd., and Jinzi Food Co., Ltd. with respective shareholding ratios of 26.78%, 19.48%, 15.22%, 4.87%, and 3.65%.

According to the Qichacha platform, recently, the fifth largest shareholder of Network Merchants Bank, Hangzhou Hebo Doctor E-commerce Co., Ltd., was listed as an executor, and its 40 million shares in Network Merchants Bank were frozen by the Intermediate People's Court of Wenzhou City, Zhejiang Province, until 2027.

Hangzhou Hebo Doctor E-commerce Co., Ltd. is a subsidiary of Giant Group, with the actual controller being Shi Yuzhu.

At the same time, the third-largest shareholder, Ningbo Jinrun Asset Management Co., Ltd., and the sixth-largest shareholder, Jinzi Food Co., Ltd., have also pledged Network Merchants Bank's equity to varying degrees, and previously, the fourth-largest shareholder, Fosun Industry, has pledged 30% of its shares, or about 300 million shares.

In addition, in January of this year, Wanxiang SanNong Group Co., Ltd. planned to transfer its 720 million shares in Network Merchants Bank to Minsheng Life Insurance Co., Ltd.

Recently, the shareholders of Network Merchants Bank have been very active, which may also lead to concerns about the stability of its equity structure.

Fined over 7 million for multiple violations.

In recent years, the financial industry regulation has become increasingly strict, and the future tone will continue to strengthen and improve financial regulation and enhance financial risk prevention and control capabilities.

As of August 31, 2024, the National Financial Regulatory Administration's official website has announced a total of 5,592 fines, with a total penalty amount of 1.495 billion yuan.

Among them, 617 fines were announced in August, with a total amount of 168 million yuan, with the highest penalty amount being Network Merchants Bank.

According to the website of the Zhejiang Regulatory Bureau of the National Financial Regulatory Administration, Network Merchants Bank was fined 7.35 million this year for multiple illegal and irregular matters.

According to the public disclosure of administrative penalty information, the main illegal and irregular facts of Network Merchants Bank include: failure to disclose major changes in corporate governance in a timely manner; major related transactions continued without review and approval; change of business premises without approval; late reporting of criminal case information; failure to disclose service price information as stipulated; imprudent management of personal loans, with loan funds being misappropriated; non-clean transfer of credit assets, false off-balance sheet; violation of regulations to raise deposit interest rates; failure to determine the entrusted payment limit for loan funds and failure to implement entrusted payment supervision requirements; imprudent non-standard management; insufficient measurement of credit risk-weighted assets for bill rediscounting business; lax review of trust products sold; incorrect use of accounting subjects for investment business of financial products, etc.

Although the fine of more than 7 million yuan may not have a significant impact on Network Merchants Bank's asset size, compliance and risk control as the "lifeline" of the banking industry, once crossed, the consequences will be unimaginable.

According to public information, the penalty is basically aimed at irregularities that occurred during 2022, and Network Merchants Bank stated externally that it has basically completed the rectification of the above irregularities and will continue to strengthen rectification.

Since its establishment, Network Merchants Bank has been backed by the Alibaba ecosystem and deeply integrated with it, serving small and micro enterprises.

In recent years, the company has also been actively seeking transformation to reduce its dependence on the Alibaba system.

Public data shows that so far, Network Merchants Bank has reached a sales cooperation with 23 bank wealth management subsidiaries, with sales of financial products exceeding 500 billion yuan, and the asset management scale has broken through 800 billion yuan.

How to find new profit growth points as soon as possible is also one of the important issues for Network Merchants Bank at present.