According to CICI, the above ratings are based on a comprehensive assessment of the macroeconomic and industrial environment, the financial strength of Yantai rural commercial bank and the terms of the bonds. The downgrade takes into account many challenges faced by Yantai rural commercial bank, including the great pressure on asset quality caused by the continuous downturn of macro-economy, lower provision than regulatory requirements, high loan concentration, great downward pressure on asset quality, continuous weakening of profitability, rising pressure on capital replenishment, enhancement of brand and core competitiveness, corporate governance mechanism and risk management system It needs to be improved.
Bank credit rating is an evaluation of a banks overall financial ability to pay off its financial debts. It is of great significance for depositors and investors to evaluate risk returns, optimize investment structure and avoid investment risks. Once banks are downgraded, the most direct impact is that they will pay higher costs when issuing bonds, an unnamed banking source told the China times
Judging from the operating conditions of Yantai Agricultural commercial bank, the obvious deterioration of the banks asset quality is the main reason for its downgrade.
By the end of 2019, the overdue loans of the bank amounted to 3.133 billion yuan, accounting for 11.79% of the total loans. The proportion of loans overdue for more than 90 days in the total loans increased significantly by 3.61 percentage points to 8.15% compared with the beginning of the year, and the trend of continued downward migration of overdue loans was obvious. Affected by this, the banks non-performing loans continued to rise, with 1.686 billion yuan of new non-performing loans in 2019, mainly concentrated in the wholesale and retail industry and manufacturing industry. The bank has disposed of non-performing loans totaling 514 million yuan, including 193 million yuan of cash settlement, 205 million yuan of write off, 36 million yuan of debt repayment with assets, 57 million yuan of active restructuring, and 22 million yuan of increase in business improvement.
Last year, the balance of non-performing loans of Yantai rural commercial bank was 2.343 billion yuan, a year-on-year increase of 1.172 billion yuan, with a growth rate of 100.09%; the non-performing loan ratio increased by 4.23 percentage points to 8.82% year-on-year. The banks large non-performing loans of more than 10 million yuan accounted for 87.13% of the total non-performing loans, mainly guaranteed loans and mortgage loans. Due to the complex relationship between creditors rights and debts, the shortage of collateral or the difficulty of disposal, the subsequent recovery of large amount of non-performing loans faces great uncertainty.
In addition, the bank provides credit support to customers with temporary cash flow difficulties by means of extension and borrowing. As of the end of 2019, the balance of new and old loans (including non repayable loans) was 5.791 billion yuan, accounting for 21.79% of the total loans, including 3.899 billion yuan of focused loans and 737 million yuan of non-performing loans; the balance of extended loans was 591 million yuan, including 251 million yuan of focused loans and 148 million yuan of non-performing loans. As a result, as of the end of 2019, the balance of the banks special interest loans was RMB 4.837 billion, mainly including new and old loans and overdue loans, accounting for 18.2% of the total loans. The above-mentioned types of loans have great downward pressure on asset quality.
Due to the rapid growth of non-performing loans, the provision coverage ratio of Yantai rural commercial bank decreased by 48.79 percentage points to 76.7% compared with the end of 2018, which was far below the regulatory requirements, and its ability to resist risks and absorb losses was weak. China integrity international pointed out that, considering the high proportion of loans such as new loans and old loans, the pressure of provision provision provision in the future is still large.
In terms of loan industry distribution, affected by the local resource endowment and economic structure characteristics, by the end of 2019, the top five loan industries of the bank were wholesale and retail industry, manufacturing industry, real estate industry, construction industry, leasing and business service industry, accounting for 70.7% of the total loans, of which manufacturing industry accounted for 20.98%, and the sub industries were food processing, metal products, equipment manufacturing, etc Mainly, the industry concentration is high.
In terms of real estate loans, by the end of 2019, the banks real estate and construction industry loans accounted for 19.99% of the total loans. China integrity International believes that in recent years, the macro-control of real estate has been continuously strengthened, and the banks real estate and related industries have a large exposure, and the relevant risks still need to be paid close attention to.
Profits have been declining for four consecutive years
The decline of asset quality of Yantai Agricultural commercial bank led to the significant narrowing of interest margin and the sharp increase of provision provision, which made the net profit continue to decline and the profitability was at a low level.
Since 2019, the banks business has maintained growth. As of the end of last year, the banks profitable asset scale was 45.167 billion yuan, up 4.09% from the beginning of the year. However, due to the decline in asset quality and intensified competition among peers, the net interest margin of the bank in 2019 decreased significantly by 0.44 percentage points to 2.9% compared with the previous year. Under the combined influence of the above factors, the bank realized a net interest income of 1.282 billion yuan in 2019, a decrease of 8.83% compared with the previous year. Yantai rural commercial bank is mainly engaged in traditional loan business, with interest income as its main source of income. Under the influence of the decrease of net interest income, the bank realized a net operating income of 1.257 billion yuan last year, 10.14% lower than that in 2018.
In terms of provision provision provision, due to the great pressure of non-performing growth, the bank continued to maintain a large amount of provision. In 2019, the bank made provision for loan impairment of 396 million yuan, accounting for 63.78% of the pre provision profit, an increase of 7.25 percentage points over the previous year.
Driven by the above factors, the bank realized a net profit of 139 million yuan last year, a sharp decrease of 24.67% compared with that in 2018; the average return on capital and average return on assets were 3.85% and 0.31%, respectively, 1.29% and 0.12% lower than the previous year, and the profitability was at a low level.
In fact, the net profit of Yantai Agricultural commercial bank is not the first time to decline. In 2016, the bank only realized a net profit of 236 million yuan, a year-on-year decrease of 25.91%, while its operating revenue increased by 3.93% year-on-year. Since then, in 2017 and 2018, although the revenue for two consecutive years exceeded 1.4 billion yuan, the banks profit still did not improve, with 205 million yuan and 170 million yuan respectively, with a decrease of 13.14% and 17.07%.
According to the 2019 annual report, Yantai rural commercial bank was approved to be established on June 15, 2012 on the basis of the original five rural credit cooperatives in Zhifu District, Laishan District, Fushan District, Muping District and Yantai Economic and Technological Development Zone. By the end of 2019, the bank had a registered capital of 2.5 billion yuan, 107 business outlets, and 1607 cadres and employees.
As of the end of the report period, the total assets of Yantai Agricultural commercial bank was 44.779 billion yuan, an increase of 1.357 billion yuan or 3.13% over the same period of last year; the total liabilities was 41.166 billion yuan, an increase of 1.335 billion yuan or 3.35% compared with the end of last year; the owners equity was 3.613 billion yuan, an increase of 22 million yuan or 0.61% compared with the end of last year. Public information shows that Yantai rural commercial bank plays an important role in the financial system of Yantai city. Last year, the balance of deposits taken in by the bank was 37.889 billion yuan, an increase of 3.2% over the end of the previous year; the balance of loans and advances was 26.579 billion yuan, up 4.04% year on year. The market share of deposits and loans in Yantai reached 8.45% and 8.02% respectively. Source: China Times editor in charge: Li Zhaoyuan_ B7890
As of the end of the report period, the total assets of Yantai Agricultural commercial bank was 44.779 billion yuan, an increase of 1.357 billion yuan or 3.13% over the same period of last year; the total liabilities was 41.166 billion yuan, an increase of 1.335 billion yuan or 3.35% compared with the end of last year; the owners equity was 3.613 billion yuan, an increase of 22 million yuan or 0.61% compared with the end of last year.
Public information shows that Yantai rural commercial bank plays an important role in the financial system of Yantai city. Last year, the balance of deposits taken in by the bank was 37.889 billion yuan, an increase of 3.2% over the end of the previous year; the balance of loans and advances was 26.579 billion yuan, up 4.04% year on year. The market share of deposits and loans in Yantai reached 8.45% and 8.02% respectively.