( Beijing, 17th June 2020 ) In order to save the real economy hit by the epidemic, China's financial regulator is reported to be guiding commercial banks to make appropriate profits.
According to people familiar with the matter, the regulator intends to urge Chinese banks to maintain single-digit growth in net profit growth this year, encourage banks to compress profits and issue loans, and further benefit the real economy.
Among them, two people familiar with the matter said that the regulatory authorities will also encourage banks to maintain reasonable growth in profits by continuing to maintain asset quality and adequately accruing provisions. The local banking and insurance regulatory bureau has begun to communicate with some banks.
Although China's large state-owned banks still achieved profit growth in the first quarter of this year, the growth rate slowed down, and non-performing loans rose slightly due to the severe economic downturn. For example, the profit and loss of the Industrial and Commercial Bank of China in the first quarter rose to 3% since the end of 2018. The lowest growth rate; but there are still some joint-stock banks and regional banks that have recorded good growth. Institutions including China Merchants Bank, Bank of Ningbo, China Everbright Bank and other institutions have achieved double-digit net profit growth in the first quarter.
Two people familiar with the situation said that some medium-sized banks and city commercial banks will be more affected this time. People familiar with the matter declined to be named because the information was not disclosed; the China Banking Regulatory Commission could not immediately comment.
According to data from the China Banking Regulatory Commission, in the first quarter of this year, China’s commercial banks accumulated a net profit of RMB 600.1 billion (approximately RM 362 billion), a year-on-year increase of 5%, and the growth rate has declined; the non-performing loan ratio increased by 0.05% to 1.91% From the perspective of the provision coverage ratio, at the end of the first quarter, the provision coverage ratio of commercial banks was 183.2%, a decrease of 2.88 percentage points from the end of the previous quarter.
The research group of the People's Bank of China Research Group previously published "Objective Viewing the Growth of Banking Profits in the First Quarter" pointed out that with the lagging effect of the transmission of real economic difficulties to the financial sector, and the impact of some policy factors, the bank's late non-performing loan disposal And the pressure on capital consumption has increased significantly, and the growth rate of bank profits may decline.
The work report of the Chinese government also emphasizes that financial institutions and loan companies coexist and prosper, and encourages banks to make reasonable profits. In order to protect the market players, the availability of loans to small and medium-sized enterprises must be significantly improved, and the cost of comprehensive financing must be significantly reduced.
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