Bank body sees steady year ahead

China Daily (Hong Kong) - - BUSINESS - By CAI XIAO caix­iao@chi­nadaily.com.cn

For Chi­nese banks, this year will be steady as their as­sets will likely grow by around 10 per­cent and non-per­form­ing loan ra­tio will be be­low 2 per­cent, ac­cord­ing to a re­port of the China Bank­ing As­so­ci­a­tion re­leased on Fri­day.

“China’s steady and up­beat eco­nomic con­di­tions, pru­dent and neu­tral mon­e­tary pol­icy and the bank­ing in­dus­try reg­u­la­tor’s ef­fec­tive reg­u­la­tory mea­sures have all con­trib­uted to the healthy op­er­a­tion of the Chi­nese bank­ing in­dus­try,” said Lian Ping, chief econ­o­mist of Bank of Com­mu­ni­ca­tions and a prin­ci­pal au­thor of the CBA re­port.

The re­port said Chi­nese banks had to­tal as­sets worth 181.7 tril­lion yuan ($27 tril­lion) in 2016, up 16.6 per­cent yearon-year.

Out­stand­ing debts owed to them reached 168.6 tril­lion yuan last year, up al­most 17 per­cent year-on-year. Net profit in 2016 to­taled 1.65 tril­lion yuan, up 3.5 per­cent year-onyear.

Lian said both as­sets and debts will likely grow by about 10 per­cent this year and next year, while profit will grow at the same rate as in 2016.

“In­flu­enced by pru­dent and neu­tral mon­e­tary pol­icy, in­ter­est rate lib­er­al­iza­tion and in­ter­net fi­nance, Chi­nese banks are fac­ing the pres­sure of cost in­crease,” said Lian. “At the same time, en­ter­prises are hav­ing larger de­mand for loans as China’s econ­omy has im­proved in the first half of this year, so banks have stronger ca­pa­bil­i­ties in loan pric­ing, and the in­ter­est rate spreads can be steady.”

The CBA re­port said the non-per­form­ing loan ra­tio of Chi­nese banks in 2016 was 1.74 per­cent, up 0.07 per­cent­age point com­pared with 2015.

“Chi­nese banks’ non-per­form­ing loan ra­tio has been a lit­tle higher than 1.7 per­cent, and we ex­pect the ra­tio won’t ex­ceed 2 per­cent in 2017, which is low from a global per­spec­tive,” said Lian.

Ac­cord­ing to him, there are some new char­ac­ter­is­tics of China’s non-per­form­ing loans. Small and mi­cro-sized en­ter­prises in Jiangsu and Zhe­jiang provinces are grad­u­ally get­ting rid of non-per­form­ing loans, while there are a few new risks in cen­tral and west­ern re­gions as well as for large and medium-sized en­ter­prises.

“Over­all, the risks of Chi­nese banks’ non-per­form­ing loans are con­trol­lable,” said Lian, adding that China’s sound econ­omy and banks’ strong prof­itabil­ity are pos­i­tive for elim­i­nat­ing non-per­form­ing loans.

The CBA re­port also said Chi­nese banks are ex­plor­ing in­no­va­tive busi­ness mod­els. For ex­am­ple, they are of­fer­ing loans to high-tech star­tups with eq­uity stake in the lat­ter as col­lat­eral. By the end of 2016, Chi­nese banks in Bei­jing had of­fered 4 bil­lion yuan in such loans.

“Chi­nese banks will deepen busi­ness trans­for­ma­tion and in­no­va­tion and im­prove ca­pa­bil­i­ties of serv­ing cus­tomers,” said Pan Guang­wei, vice-pres­i­dent of the CBA.

to­tal as­sets of China’s banks in 2016

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