Com­mer­cial banks’ NPL ra­tio moves higher in Q4

China Daily (Canada) - - BUSINESS -

Reg­u­la­tor will give high pri­or­ity to fi­nan­cial risk pre­ven­tion and con­trol

bank­ing su­per­vi­sion and­man­age­ment on Tues­day, CBRC Chair­man Shang Fulin said the reg­u­la­tor will give higher pri­or­ity to fi­nan­cial risk pre­ven­tion and con­trol in 2017.

Shang said it will stick firmly to its base­line of pre­vent­ing sys­temic risk and solidly push for­ward risk pre­ven­tion and con­trol in key ar­eas, as well as tightly con­trol­ling NPL risks.

The CBRC said it will re­fine the clas­si­fi­ca­tion of credit as­sets, in­ten­sify the screen­ing of hid­den risks, tightly con­trol the in­crease of risks and strictly man­age the power of ap­proval at dif­fer­ent lev­els.

The com­mis­sion said it will re­strain com­pa­nies from es­cap­ing and re­vok­ing debts and strengthen co­op­er­a­tion and in­for­ma­tion shar­ing with lo­cal govern­ment and le­gal de­part­ments.

It added that it will also step up pun­ish­ment of dis­cred­ited com­pa­nies and com­pany own­ers, strictly con­trol risks in lo­cal govern­ment fi­nanc­ing ve­hi­cles, and press for­ward with a cam­paign to tackle peer-to-peer lend­ing risks and tele­com fraud.

“In the short and medi­umterm, Chi­nese in­dus­tries with ex­cess ca­pac­ity will con­tinue re­duc­ing ca­pac­ity and stocks,” said Wen Bin, prin­ci­pal re­searcher at Chi­naMin­sheng Bank­ing Corp Ltd.

“Com­pa­nies on the brink of bank­ruptcy, known as ‘zom­bie com­pa­nies’, will exit from the mar­ket. These will bring fur­ther pres­sure to banks with re­gard to non­per­form­ing loans, but the risk is gen­er­ally con­trol­lable.”

In 2016, banks ex­panded chan­nels and in­no­vated mea­sures for NPL dis­posal by hav­ing trial pro­grams on non­per­form­ing as­set se­cu­ri­ti­za­tion and debt-to-equity swaps.

Wen said ad­di­tion­ally, banks will con­trol the in­crease in their NPLs by ad­just­ing their credit struc­ture — mak­ing dif­fer­ent credit poli­cies for dif­fer­ent clients, sec­tors and re­gions based on China’s in­dus­trial poli­cies.

Over­all, the bank­ing sec­tor op­er­ated steadily last year.

Data from the CBRC showed net prof­its for the year rose by 4 per­cent to 2 tril­lion yuan ($289.8 bil­lion).

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