China Banking Association Report: Banking industry shows a slowdown in debt growth

 China Banking Association Report: Banking industry shows a slowdown in debt growth

In 2018, the banking business environment was complex, the pace of global economic recovery slowed down, and Chinas economic operation was generally stable. The banking industry adheres to the structural reform of the supply side, improves quality and efficiency, and maintains overall sound operation, and gradually moves from high-speed development to high-quality development. In 2018, commercial banks realized a total net profit of 1830.2 billion yuan, an increase of 4.72% over the same period of last year, and their profitability was stable. The reserve coverage rate was 186.31%, which increased by 4.89 percentage points over the same period of last year, and their risk-offsetting ability was significantly enhanced.

2. The expansion of assets has stabilized and the structure of assets has been continuously optimized.

In 2018, commercial banks took serving the real economy as the main line, steadily increased credit input, and the growth rate of assets stabilized. Under the policy guidance of the regulatory authorities, commercial banks have gradually adjusted their business models, increased the investment of credit and other assets, and the growth of assets has begun to stabilize. By the end of 2018, the scale of domestic and foreign currency assets of banking financial institutions was 268.2 trillion yuan, an increase of 6.27% over the previous year. The asset structure is gradually optimized. On the one hand, the regulatory authorities guide commercial banks to increase credit support to the real economy, on the other hand, they introduce targeted policies to restore market confidence, the scale of credit assets is growing, and off-balance-sheet financing begins to repair. By the end of 2018, commercial bank loans amounted to 14.2 trillion yuan, an increase of 12.85% over the same period, which was higher than the asset growth rate of 6.58 percentage points, and the ability of banking to serve the real economy was further enhanced. Non-credit assets have contracted, and there are obvious differences between different banks and different businesses. By the end of 2018, the scale of non-credit assets of major listed banks had decreased by 7.80%, accounting for 30.31% and 4.7% respectively. Among them, the scale and proportion of non-credit assets of joint-stock commercial banks have declined considerably, while large commercial banks and city commercial banks are basically stable. Among the main business categories, the purchased and resold assets declined greatly, while the deposited and dismantled funds were relatively stable.

In 2019, with the increase of real economic and financial demand and the expansion of investment areas, commercial banks will further strengthen their efforts to serve the real economy, and the growth rate of asset scale is expected to increase slightly, and the asset structure is expected to be further optimized.

3. Debt growth continues to slow down and non-deposit liability business is further standardized

In 2018, the expansion of bank liabilities continued to slow down. By the end of 2018, the total liabilities of commercial banks were 193.49 trillion yuan, up 6.28% year-on-year, down 1.7 percentage points from 2017, and the growth rate declined for two consecutive years. There is structural differentiation in the development of deposit business. By the end of 2018, the total amount of public deposits in domestic and foreign currencies of financial institutions was 107.72 trillion yuan, an increase of 5.73% year on year, a decrease of 3.65% over 2017, and the growth rate of enterprise deposits continued to decline. The balance of household deposits was 72.44 trillion yuan, an increase of 11.11% over 2017, an increase of 3.62 percentage points, and the growth rate of household deposits rebounded. The business of non-deposit liabilities has been further standardized and developed into an adjustment period. Influenced by different liquidity conditions, liquidity management capabilities and liquidity management strategies of banks, the deposit funds of 32 listed banks and other institutions were 13.57 trillion yuan at the end of 2018, a decrease of 1.54% compared with the same period of last year. The growth rate of issuance scale of interbank deposit receipts market slowed sharply, and the cost of non-deposit liabilities decreased slightly.

In 2019, the liabilities business of commercial banks will still face the challenges of intensified competition of capital sources and more flexible pricing of deposit interest rates. Commercial banks will take various measures to continuously promote business transformation, strengthen innovation of financial products, enhance the level of financial services, improve the ability of capital acquisition, and rationally use diversified debt instruments to promote liabilities. Business is developing steadily. Deposit business should increase customer development, strengthen product innovation and improve the level of fine management; non-deposit liability business should flexibly use various tools, optimize the structure of non-deposit liability, strengthen the construction of professionals, enhance market research and take the initiative to prevent and resolve the risk of non-deposit liability.

New type of intermediary business revenue has declined steadily. In 2018, the revenue of new intermediary business was 234.443 billion yuan, a decrease of 54.368 billion yuan compared with the same period last year, a decrease of 18.79% compared with 2017. In addition to some large state-owned commercial banks and city commercial banks, investment banking business continued to maintain stability and progress, the rest of the joint-stock commercial banks have decreased. Trusteeship business is increasingly affected by the fierce market competition, and the overall revenue has declined. Financial revenue continued to shrink in 2018, down 28.8% year-on-year.

Fifth, the credit risk remains stable and the market and liquidity risk can be controlled as a whole.

6. Accelerating the Reform and Transition and Fully Stimulating the Vitality of Management

Facing the profound changes in the operating environment, the banking financial institutions further deepen the reform of the system and mechanism, fully stimulate the operational vitality, continuously enhance the core competitiveness, and constantly improve the quality and effectiveness of the service entity economy.

Firstly, we should actively respond to the challenges brought by the merger of interest rates, and make comprehensive use of various means to prepare for the smooth promotion of interest rate marketization. The coexistence of two-track interest rates brings a series of challenges to commercial banks and monetary policy transformation. In the future, it is necessary to expand the breadth and depth of financial markets by vigorously developing derivatives markets, so as to lay the foundation for the reform of interest rate consolidation.