Chinese banks and stealth easing

Although many are probably still hoping for official monetary cuts in China, credit easing appears underway anyway in mortgages.

This is not completely new. In fact, some weeks ago I became aware of some banks offering mortgages with interest rates reduced by 10-15% for first-time buyers.  Sina is now reporting that reduction of mortgage rates in various cities, and today it is said that more people are able to enjoy a 15% reduction of rates in Shanghai than previously.  On top of this reduction in interest rates, mortgages are also easier to come by.  However, banks continue to deny that they are giving out more mortgages at lower rates, despite evidence to the contrary.

Still on banks and the China Banking Regulatory Commission (CBRC) has published its 2011 annual report (in Chinese, so it’s lucky you have me!).  Here’s the press release, and the whole thing can be read here.  Here are some of the figures I find interesting.

Total banking and financial institutions assets amounted to RMB113.3 trillion at the end of 2011 (239.7% of 2011 nominal GDP), increased by RMB18 trillion from the previous year.  Total liabilities amounted to RMB106.1 trillion, increased by RMB16.6 trillion from the previous year.  Shareholders’ equity amount to RMB7.2 trillion, increased by RMB1.4 trillion from the previous year.  Of all the assets, 47.3% of them are held by big commercial banks.  The charts below show the assets and liabilities of banks (left) and the share of assets by various types of banks (right):

Overall capital adequacy for commercial banks according to CBRC reached 12.71% at the end of 2011, increased by 55 bps from the previous years (chart 3), while core capital adequacy reached 10.24%.  All banks had their capital adequacy ratio above 8%.  Non-performing loans decreased by RMB190.4 billion to RMB1.05 trillion according to them, with an NPL ratio of 1.77%, a 66 bps reduction from the previous years.  The NPL ratio was 0.96% for commercial banks at the end of 2011, a reduction of 17 bps from the previous years:

Loan loss reserves increased by RMB246.1 billion to RMB1.19 trillion at the end of 2011 (Chart 5), with provision coverage of 278.1% (Chart 6).

Banking profits for 2011 were RMB1.25 trillion, an increase of 39.3%, with ROE of 19.2% and ROA of 1.2%, while the loan-to-deposit ratio reached 72.7%.

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Comments

  1. Thanks Zrathustra,

    From “Sina is now reporting that reduction of mortgage rates in various cities, and today it is said that more people are able to enjoy a 15% reduction of rates in Shanghai than previously. On top of this reduction in interest rates, mortgages are also easier to come by”

    My understanding is that this would make it easier to service a mortgage and/or invest in more property?

    Is the second part what the Chinese Governmant wants?

  2. Need……….more……..Weetbix!

    *Zarathustra*

    Sorry ’bout that Chief

    PS Also need an edit button 🙂