Date
21 August 2017
Chinese Yuan Bank Note Images

The Big Picture: SOCIAL FINANCING

China’s total social financing (TSF), which includes new loans, corporate bonds and some off-balance sheet items, hit a record 17.29 trillion yuan (US$2.86 trillion) last year, up 1.53 trillion yuan from 2012, a central bank official said on Wednesday.

New loans amounted to 8.89 trillion yuan during 2013, up 8.39 percent or 687.9 billion yuan from the previous year, said Sheng Songcheng {盛松城}, head of the statistics department at the People’s Bank of China.

The proportion of yuan lending in the TSF fell to 51.4 percent, a historical low, from 52 percent in 2012, Sheng said in a webcast. During the year, financial institutions reported off-balance sheet business worth a combined 5.17 trillion yuan, representing 29.9 percent of all social financing.

Of the TSF, 11.7 percent or 2.02 trillion yuan was contributed by direct fund-raisings through the issues of corporate bonds and shares, Sheng said. Corporate bond issuance fell to 1.8 trillion yuan last year from 2.2 trillion yuan in 2012.

The increase in TSF does not necessarily mean that the financial market is providing enough support to the real economy, given that the proportion of off-balance-sheet items, which include trust loans, entrusted loans and non-discounted bank bills, remains high, observers say. These items increased probably due to the growing issuance of wealth management products.

Last June, Premier Li Keqiang {李克強} created an artificial credit crunch to curb the wealth management product issuance. The move helped slash the TSF by 42 percent to 1.04 trillion yuan that month but the effect was not sustainable. Meanwhile, it discouraged corporate bond issuance, making things difficult for small firms. To prevent problems, Li refrained from a fresh credit squeeze at the end of last year, observers said. 

Listed banks face lower interest income growth

The net interest income of listed banks is expected to slow to 10 percent and their revenue growth decelerate to 10.7 percent this year, the China Securities Journal reported Thursday, citing a report from a Bank of Communications research unit. The average non-performing loan ratio of the listed lenders is expected to rise by 0.1 to 0.2 percentage point to 1.1 percent or 1.2 percent in 2014. Banks are expected to implement a series of measures, including cutting operating costs and managing credit costs, to offset the impact of slower growth. 

Shanghai banks said to have scrapped first-home loan rate discount

Banks in Shanghai removed a 15 percent lending rate discount for first-home buyers even as the lending quota rose at the start of the year, the Shanghai Securities News reported Thursday, citing banking sources. The Shanghai branches of the big-four state-owned banks as well as joint-stock commercial banks are all lending to first-home buyers at the benchmark rate, the paper said. The move came as banks grappled with tighter liquidity and the failure of less profitable home loans to cover the costs of high-yield wealth management products, according to the report.

–Contact HKEJ at [email protected]

JP/AC/RC

 

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