The semi-annual report shows that the non-performing rates of the six major state-owned banks have all declined-
The rebound momentum of non-performing loans is initially curbed
Our reporter Guo Ziyuan
The recently disclosed 2021 semi-annual report of listed banks shows that as of the end of June 2021, the quality of credit assets of listed banks has basically stabilized, the non-performing loan ratios of six state-owned banks have declined, and the non-performing loan ratios of many joint-stock commercial banks have also On a downward trend, the rebound momentum of non-performing loans has been initially curbed.
The tenth meeting of the Central Finance and Economics Committee held a few days ago emphasized that we must adhere to the bottom line thinking, strengthen the system concept, follow the principles of marketization and rule of law, and coordinate the prevention and resolution of major financial risks.
For the banking industry, which occupies a dominant position in my country’s financial system, as the global new crown pneumonia epidemic continues to evolve, the external environment has become more complex and severe, and the domestic economic recovery is still unstable and uneven. How to deal with the concentrated rebound of non-performing loans has become Important topics.
In response to this, a number of persons in charge of listed banks said that next, on the one hand, they will continue to "eliminate risks and reduce risks", increase risk prevention and control in key areas, and pay close attention to local hidden debts, real estate, high pollution and high energy consumption. Industry, etc.; on the other hand, it will speed up the "disposal of silt", continuously improve the operating capacity of risky assets, and broaden the disposal channels of risky assets.
Non-performing loan ratio fell slightly
After vigorously disposing of non-performing loans in the whole year of 2020 and the first quarter of 2021, although the balance of non-performing loans "increased and decreased", the non-performing loan ratios of many listed banks have fallen, and there are forward-looking indicators such as special mention loans. There is also a positive trend.
Specifically, the non-performing loan ratios of the six major state-owned banks have all declined.
As of the end of June 2021, the non-performing loan ratios of Industrial and Commercial Bank of China, Agricultural Bank of China, Bank of China, China Construction Bank, Bank of Communications, and China Postal Savings Bank were 1.54%, 1.50%, 1.30%, 1.53%, 1.60%, and 0.83, respectively. %, a decrease of 0.04 percentage points, 0.07 percentage points, 0.16 percentage points, 0.03 percentage points, 0.07 percentage points, and 0.05 percentage points from the end of 2020.
However, due to the unstable recovery of certain industries and enterprises, the balance of non-performing loans of the six major banks, except for Bank of China, all rose slightly.
In addition, the non-performing loan ratios of many joint-stock commercial banks have also declined.
As of the end of June 2021, the non-performing loan ratios of China Merchants Bank, China CITIC Bank, and Industrial Bank were 1.01%, 1.50%, and 1.15%, respectively, down 0.06 percentage points, 0.14 percentage points, and 0.1 percentage points from the end of the previous year.
In terms of industry distribution of non-performing loans, they are mainly concentrated in manufacturing, leasing and business services, wholesale and retail; in terms of geographical distribution, they are mainly concentrated in the western, Bohai-Rim and central regions.
In addition, due to the repeated effects of the epidemic in some overseas countries and regions, the quality of overseas assets of some listed banks is under pressure. As of the end of June 2021, the balance of overseas non-performing loans and the rate of non-performing loans have both increased slightly compared with the end of the previous year.
"The new non-performing loans that occurred overseas are mainly concentrated in industries such as real estate and aviation that are continuously affected by the epidemic, but overall the risks are controllable." said Liu Jiandong, director of risk at Bank of China.
Forward-looking indicators are steadily improving
Despite the slight increase in the balance of non-performing loans, the forward-looking risk indicators of many listed banks have shown a trend of “stability while improving”: First, the proportion of special mention loans has declined, and second, the provision coverage ratio has increased. The ability to compensate is further enhanced.
The so-called special mention loan means that although the borrower has the ability to repay the loan principal and interest, there are some unfavorable factors that may affect the repayment. If it deteriorates, the special mention loan will become a non-performing loan.
Therefore, this indicator is usually regarded as an important leading indicator for judging bank credit risk.
From the perspective of major state-owned banks, as of the end of June 2021, ICBC's special-mention loans balance was 385.357 billion yuan, a decrease of 26.543 billion yuan from the end of the previous year, accounting for 1.93%, a decrease of 0.28 percentage points; Agricultural Bank's special-mention loans balance was 259.658 billion yuan , A decrease of 44.677 billion yuan from the previous year, accounting for 1.57%, a decrease of 0.44 percentage points; the postal savings bank’s special mention loan balance was 29.846 billion yuan, a decrease of 720 million yuan from the end of the previous year, accounting for 0.48%, a decrease of 0.06 percentage points.
"We have effectively contained the momentum of the rebound in the non-performing loan rate since the outbreak of the epidemic in 2020." ICBC Vice President Wang Jingwu said that the bank's special mention loan balance and the proportion of special mention loans have declined. The scissors gap hit a record low and remained negative for 5 consecutive quarters.
The improvement in the indicators of special mention loans relieved the pressure on the loan quality management of listed banks in the second half of the year, and the increase in the provision coverage ratio directly increased the bargaining chip for risk resistance in the second half of the year.
The so-called provision refers to the funds that the bank prepares in advance for possible loan losses. The provision coverage ratio is an important indicator for judging the bank's ability to cover risks.
Taking the provision coverage ratio of 189.37% as an example, this means that the bank has already prepared 1.89 yuan in advance to offset the possible loan loss of 1 yuan.
Judging from the disclosed semi-annual reports, listed banks have taken precautions and actively and adequately responded to the possible trend of concentrated rebound of non-performing loans, and the provision coverage ratio has generally increased.
As of the end of June 2021, the provision coverage ratios of ICBC, Agricultural Bank of China, Bank of China, China Construction Bank, Bank of Communications, and Postal Savings Bank of China were 191.97%, 274.53%, 184.26%, 222.39%, 149.29%, and 421.33%, an increase of 11.29% from the end of the previous year. Percentage points, 13.89 percentage points, 6.42 percentage points, 8.80 percentage points, 5.42 percentage points, 13.27 percentage points.
Multi-pronged approach to consolidate the foundation
In response to possible risks and countermeasures in the next step, the person in charge of a number of listed banks said that although the internal and external situation is still severe and complex, the fundamentals of China’s long-term economic improvement have not changed, and the operating conditions of enterprises are gradually improving. The quality of subsequent credit assets will stabilize and improve.
"In the second half of the year, we need to focus on the following three key risk areas." Agricultural Bank President Zhang Qingsong said, one is low-end manufacturing, wholesale and retail and other traditional high-risk enterprises; Withdrawal, some deferred debt service companies with poor development prospects and weak financial performance; third, some large and medium-sized enterprises with low efficiency and low profit and overburden under the background of economic transformation, low-level government financing platforms, and traditional energy industry and The real estate industry.
Zhang Qingsong said that in response to the above problems, the Agricultural Bank of China has been actively and steadily advancing risk resolution. Next, it will actively implement relevant national requirements, do a good job of risk research and judgment in a proactive manner, strengthen risk tracking and monitoring, implement policies and control risks by category, and adjust the classification pattern in a timely manner.
Dong Ximiao, chief researcher of China Merchants Union Finance, believes that there are three sources of hidden risks in my country’s banking industry, namely, the real estate market, local government debt, and shadow banking. Next, banks should continue to strengthen tracking analysis and early warning forecasts in the above areas to improve The basic system and emergency response plan for risk prevention and control continuously improve risk management and control capabilities to achieve early detection, timely processing, and recovery as soon as possible.
"ICBC has established a comprehensive risk management system, following the risk management path of'proactive prevention, intelligent control, and comprehensive management' to adjust the structure, promote resolution, and optimize disposal in a multi-pronged approach." Wang Jingwu said.
One is to continue to promote a strong foundation.
"ICBC insists on solving the basic problems of risk management and control during development, and in accordance with national policy guidance and actual market demand, it increases credit support for key industries supported by macroeconomic policies, key areas for national strategic development, and key customers with good market prospects. Continuously optimize the credit structure and layout." Wang Jingwu said.
The second is to continue to strengthen the elimination of dangers.
Strengthen the prevention and control of risks in key areas, pay close attention to the risks in key areas such as local hidden debt, real estate, high-pollution and high-energy-consuming industries, and strengthen the forward-looking risk identification and prevention of hidden-risk customers and key large-scale investors.
The third is to continue to speed up the "disposal and dredging".
Continuously improve the operating capabilities of risky assets, strengthen the refined management of risky assets, optimize the disposal structure, and increase the proportion of non-performing assets in cash collection.
In the first half of 2021, ICBC has processed a total of 84.4 billion yuan of non-performing loans, which not only further digests the existing risks but also provides an important guarantee for stabilizing asset quality.
Our reporter Guo Ziyuan