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Bank tightens excess capacity loan mitigation risk, non-perf

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The quality of commercial banks’ assets is still deteriorating. According to the main regulatory indicators released by the China Banking Regulatory Commission in the fourth quarter of 2015, as of the end of 2015, the non-performing loan balance of the commercial banking industry rose to 1,274.4 billion, a 51.2% increase from the end of 2014; the non-performing loan ratio was 1.67%, up from the end of 2014. 0.42 percentage points, up by 0.08 percentage points from the end of the third quarter of 2015, this is the 10th consecutive quarter of this data. Industry insiders expect that the rise of bank non-performing loans has not yet peaked, and the quality of bank assets will continue to be under pressure. In this context, almost all banks have taken the initiative to adjust the credit structure, compress loans in excess capacity industries, and implement a strict list system to strictly control new loans in high-risk industries. In view of the non-performing loans, the banks are now exploring new ways of resolving outside the traditional way, and the heat of non-performing asset securitization is heating up. Expected improvement in asset quality Zhu Yu, a partner of PwC Financial Services, said in an interview with the Economic Information Daily that the non-performing loan ratio reached 1.67% at the end of 2015, if the bank’s nuclear assets for two years were taken into account. If the sales force is further increased and the non-performing assets written off are restored, the non-performing loan ratio may have exceeded 2%. However, he also said that from a global perspective, the static level of 1.67% is a level of non-performing rate that the banking industry can bear. Fu Lichun, research director of Lianxun Securities, said that the balance of non-performing loans of commercial banks has been rising since September 2011 (407.8 billion). In December 2015, it has reached 1,274.4 billion. This trend is still going on. Although loans continue to grow, banks have also increased the write-off of non-performing loans, but the non-performing loan ratio has continued to grow in line with the bad balance: the non-performing loan ratio at the end of 2013 was 1%, at the end of 2014, it was 1.25%, and at the end of 2015, it reached 1.67%. . “The rapid loan growth at the beginning of 2016 will dilute the non-performing loan ratio to a certain extent, but the long-term trend of rising non-performing rate has not changed. At present, the public loan is facing a comprehensive risk, whether it is for state-owned enterprises or for private enterprises, whether it is a large enterprise or a small and medium-sized enterprise. Whether it is a traditional industry or an emerging industry, the bank's risk control capability has been mentioned at an unprecedented height.” Zhu Yu said that in terms of banks, the growth rate of medium-sized banks' non-performing loans is fast, but the absolute number is still larger than that of large banks. Big. Many small banks can postpone or dilute the formation of their non-performing ratios because of the rapid growth of their assets. However, the anti-risk ability of small and medium-sized banks is still relatively weak overall. The continued pressure on bank assets has become the consensus of the industry. Many staff members in the banking system told reporters that there is no obvious feeling that the quality of assets has bottomed out. It is expected that "one year and a half" will be difficult to improve. The Bank of Communications Financial Research Center released the "2016 Commercial Bank Operation Outlook", saying that the slowdown in economic growth in 2016 has not changed, and there is continuous pressure on the quality of commercial banks' assets. It is expected that the non-performing loan ratio of commercial banks will rise to 2% to 2.2%. Zhu Yu also said that the bank's asset quality will further deteriorate. The growth rate of non-performing loans in 2016 is likely to be faster than 2015. Adjusting the strict control of overcapacity in the industry, Zhu Yu said that from the perspective of the region, in the past, the southeast coast such as Jiangsu and Zhejiang was the hardest hit area for non-performing loans. Since last year, the areas with bad outbreaks have further spread to, and some Lu Province. From the perspective of industries with concentrated non-performing loans, manufacturing and wholesale and retail industries generate more non-performing assets. Since the second half of last year, the extractive industry and the mining industry have also become less good. The Bank of Communications report also pointed out that small and micro enterprises, overcapacity industries, third- and fourth-tier cities, real estate loans and some credit business risk trends are still important factors in determining the credit risk of commercial banks. Under the above background, and under the guidance of the national “de-capacity” policy, the bank has been actively making adjustments to the credit structure and compressing excess capacity industry loans in order to control the quality of new loans. The "Economic Information Daily" reporter interviewed a number of commercial banks and was informed that almost all banks strictly restricted access to credits for industries such as steel, coal, and shipbuilding.

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