Banks eye glad tidings in new year as reforms take effect
Even A shares may rise, but fresh curbs could hurt smaller lenders in 2018
The new year 2018 is expected to see banks listed on the A-share market post improved performance, said analysts. Even their shares may rise in the bargain, they said.
They attributed their optimism to the ongoing economic restructuring, which will likely be further optimized this year, helping interest margins to grow steadily.
But smaller banks may face greater pressure, they said.
The banking sector is going to further diverge in the next few years, amid continuous deleveraging, strong regulation and focus shifting to consumer finance and small and medium enterprises or SMEs, said analysts.
Deleveraging and strengthened regulation may make smaller banks face greater pressure, and the banking sector is likely to diverge in the next few years, according to Orient Securities.
A guidance released in November by a number of authorities, including the banking regulator and the securities regulator in China, said that the authorities hope to remove “rigid payments”, or bailouts for asset management products, which have been widely observed in the past years.
The guidance said the authorities hope to remove rigid repayment for asset management products by mid-2019, which means asset managers will not be allowed to employ their own funds to make payments for investment products that have sustained losses.
For banks, this would mean that they can no longer use their own capital to make payments to investors.
Curbs on rigid repayments would make smaller banks lacking in reputation