(Yicai) Sept. 24 -- China Minsheng Bank has refuted rumors that its Beijing branch is slashing salaries by up to 50 percent, in the second such denial in the past three months, as China’s banking sector remains under pressure from sliding interest rates and a sluggish economy.

The Beijing branch is operating normally and employee salaries remain stable overall, the bank told Yicai yesterday.

Minsheng Bank’s Beijing branch is implementing salary cuts across the board with some reductions reaching as high as 50 percent, according to rumors circulating on social media. Some work-related reimbursements and other benefits are also said to have been suspended.

In July, there were also rumors that some of the lenders’ branches in places including Beijing had slashed wages by 40 percent and that this might increase to 50 percent by the end of the year. At that time, an internal source told Yicai the rumors were false.

Although Minsheng Bank has denied the salary cuts, the average remuneration per employee sank 7.7 percent in the first half from the same period last year to CNY33,300 (USD4,733), according to the Beijing-based lender’s latest financial report.

The squeezing of net interest margins and difficulties in making money from intermediary businesses has made it hard for banks to stay profitable. Minsheng Bank’s net profit tumbled 5.4 percent in the first half from the same period last year to CNY22.5 billion (USD3.1 billion), the report said. Revenue slumped 6.1 percent to CNY67.1 billion (USD9.5 billion).

Twelve out of China’s 42 listed banks posted declines in net profit in the six months ended June 30 from the year before, compared with five in 2023, according to data from financial information platform Wind. And this poor performance has led to less income for employees.

In the first half, salary payouts at the 42 banks shrank for the first time in recent years, dipping 0.2 percent year on year to CNY465.5 billion (USD66.1 billion), according to Wind figures. The drop in remuneration differed from bank to bank, but the highest was by 20 percent. By contrast, wages swelled 6.4 percent in the first half of 2023 from a year ago.

In recent years, bank staff’s basic salary has decreased, while their performance-based remuneration has increased, said Dong Ximiao, chief researcher at Merchants Union Consumer Finance Company. Moreover, lenders have generally rolled out more deferred payment options for senior management and key positions, which is one of the reasons for the reduction in income for some employees.

As financial enterprises, there is a close link between banks’ remuneration payouts and their business performance, Dong said. If the banking sector performs well, employee compensation will remain stable. However, the differences between banks is expected to widen.

Editor: Kim Taylor