According to the annual report data of ICBC, China Construction Bank, Agricultural Bank of China, Bank of China, Bank of Communications, and Postal Savings Bank of China, the six major banks with assets exceeding 10 trillion yuan each faced the impact of the epidemic and the economic downturn. The quality is maintained at a good level. However, the non-performing loan balances and non-performing ratios of the six major banks have rebounded in 2020. At the performance conferences of major banks, almost all senior management were asked questions about "asset quality."
In particular, the industry is generally concerned about the impact of deferred principal and interest payments on inclusive small and micro loans since last year on bank asset quality. Taken together, the responses and statements of senior management of various banks have given the market reassurance. On the one hand, various banks have increased their efforts to dispose of non-performing assets in 2020, and two banks even used the word "unprecedented" in unison. To describe; on the other hand, banks have carried out special risk inspections in advance, and the proportion of "deterioration" of loans with principal and interest extension is controllable.
The non-performing loan ratios of the six major banks have rebounded
Data disclosed in the annual reports show that as of the end of 2020, the non-performing loan ratios of the six major banks have shown an upward trend. However, they are still significantly lower than those of small and medium-sized banks. bank and industry averages. Specifically, the non-performing loan ratio of ICBC is 1.58%, the non-performing loan ratio of China Construction Bank is 1.56%, the non-performing loan ratio of Agricultural Bank of China is 1.57%, the non-performing loan ratio of Bank of China is 1.46%, the non-performing loan ratio of Bank of Communications is 1.67%, and the non-performing loan ratio of Postal Savings Bank is 0.88%.
In fact, the occurrence of the COVID-19 epidemic in 2020 will undoubtedly be a stress test for the asset quality management of commercial banks. According to reports, ICBC has not only established a comprehensive intelligent credit risk management and control system, but also implemented full-scale financing risk management. Non-credit risks such as bond underwriting, non-standard investment, bond investment, and debt-for-equity swaps are also managed in the same way as credit.
"Last year, the asset quality of retail businesses, including credit cards, remained stable, and the quality of inclusive credit also remained stable, but our non-performing rate in the infrastructure field increased slightly. Overseas and subsidiaries were affected by the epidemic The total amount of assets has been compressed and the non-performing ratio has been on the rise. " Jin Yanmin, Chief Risk Officer of China Construction Bank, said at the performance conference, "It is expected that the asset quality in 2021 will remain balanced and controllable, and all indicators will be balanced and coordinated."
Taken together, the slight decline in the asset quality of major banks is closely related to their overseas businesses. According to Chen Huaiyu, a member of the Party Committee of the Bank of China and the proposed vice president, in 2020, affected by the epidemic, the bank's overseas institutions were greatly affected by the epidemic, and non-performing loans increased significantly. New domestic NPLs are concentrated in the manufacturing, real estate, and wholesale and retail industries, while new overseas NPLs are concentrated in the oil and gas, aviation, and real estate industries.
Unprecedented efforts in disposing of non-performing loans
In 2020, the banking industry, especially large state-owned banks that have assumed more responsibilities for benefiting the real economy, will increase credit and provide inclusive small and medium-sized enterprises. Micro enterprise loans deferred principal and interest payments. The market is generally concerned about whether the postponement of principal and interest payments will put pressure on bank asset quality, and whether some measures have been taken to alleviate this pressure in advance.
Looking at the annual reports of the six major banks, all banks, without exception, increased their efforts to dispose of non-performing assets in 2020. Among them, the senior management of China Construction Bank and Bank of Communications described the resolution as unprecedented.
"Last year, Bank of Communications *** disposed of 82.9 billion yuan of non-performing loans, 19.6 billion yuan more than the same period last year, of which 53.8 billion yuan was written off, 11.9 billion yuan more than the same period last year. Therefore, Judging from the situation in the past three years, from 2018 to 2020, the Bank of Communications disposed of a total of 231.4 billion yuan of non-performing loans, exceeding the total of the previous six years, and accumulated write-offs of 146 billion yuan, exceeding the total of the previous 13 years. It should be said that this disposal and write-offs are unprecedented," Bank of Communications Vice President Yin Jiuyong said at the results conference.
"CCB has increased its efforts in resolving disposals, asset preservation and operating capabilities, and its value creation capabilities have continued to improve. Last year, it completed disposals of 190.4 billion yuan, reaching a record high, a year-on-year increase of 20%, and its intensity is unprecedented. "Jin Yanmin said.
Data from the China Banking and Insurance Regulatory Commission shows that last year, my country’s banking industry disposed of more than 3 trillion yuan in non-performing loans.
The six major banks disposed of a total of 467.5 billion yuan in non-performing loans in 2020, of which ICBC alone disposed of 271.6 billion yuan, exceeding the total amount disposed of by the other five major banks. According to Wang Jingwu, ICBC insists on "downgrading all the assets that should be downgraded" in the classification of risk assets and "writing off all the non-performing assets that should be written off", speeding up the disposal of non-performing assets and further purifying the assets on and off the balance sheet.
Talking about the impact of deferred principal and interest payments on inclusive small and micro enterprise loans since last year on bank asset quality, senior management of each bank said that the overall risk is controllable. According to Wang Jingwu, as of the end of 2020, the "deterioration" ratio of ICBC's loans with principal and interest deferred was 0.8%, and the risks are controllable.
Carry out risk control for high-risk areas and industries
Annual report data show that due to increased efforts in disposal and write-offs, the provision coverage ratio of major banks has shown a downward trend. The provision coverage ratio of ICBC was 180.68%, a decrease of 18.64 percentage points; the provision coverage ratio of China Construction Bank was 213.59%, a decrease of 14.1 percentage points; the provision coverage ratio of Agricultural Bank of China was 260.64%, a decrease of 28.11 percentage points; the provision coverage ratio of Bank of Communications was 143.87%. , a decrease of 27.9 percentage points.
At the same time, experts believe that thanks to the continued increase in NPL disposals, banks are expected to "go into battle lightly" in 2021. Regarding the subsequent asset quality management, the senior management of each major bank proposed their respective next steps based on the actual conditions of the bank.
"Looking forward to 2021, China's economy has taken the lead in the world to resume growth, and it is expected that our bank's credit asset risks will be generally controllable. However, considering factors such as the expiration of support policies for small, medium and micro enterprises and the lag in the impact of the epidemic, , the asset quality of domestic institutions will still be under pressure." Chen Huaiyu said that Bank of China will accelerate the digital transformation of credit risk management, introduce advanced technology, enhance risk sensitivity and response speed, and improve the level of automated and intelligent risk control.
Yuan Xiaohui, a researcher at the Bank of China Research Institute, analyzed that looking forward to 2021, the overall bad burden of the banking industry has been relatively fully resolved in the past 3 to 4 years, especially after experiencing a large write-off and disposal in 2020. , it is expected that the pressure on NPL production will be reduced to a certain extent in 2021. In this context, banks should further improve their risk management levels and optimize their credit structures.
This article is from the Financial Times