Stability Analysis of Banking Industry in China (Ⅱ)
Author: Financial Research Department of National Research Network reposted from: original hits on this site: 389
(3) Profitability has increased, but the government's policy support has contributed.
Generally speaking, good and sustained profitability is regarded as a front-line "buffer" for banking stability. It can provide guarantee for banks to resist the unexpected impact of economic recession and asset quality deterioration. In 2005, the profitability of China's banking industry was further improved. According to the analysis of 60 banks in China (accounting for 80.2% of the total assets of China's banking industry last year) by the Finance Department of National Research Network, in 2005, 60 banks in China achieved net profit (Net
Income)1692.97 million yuan, an increase of 82.32% over last year. The weighted average after-tax ROE and ROA of 60 banks are 65,438+08.58% and 0.665,438+0% respectively, which are much higher than 65,438+02.65,438+06% and 0.44% in 2003, and even lower than the ROA of 0.63% in European banks. In addition, according to a survey report by graduate department, the People's Bank of China, the total pre-tax profits of the top 50 banks (ranked by owner's equity, the total assets of the 50 banks accounted for 74 1% of the total assets of the banking industry in China in 2005) were 228.599 billion yuan, an increase of 89.27% over the previous year. Its pre-tax average return on capital and return on assets were 23. 12% and 0.89%, respectively, which was the most eye-catching year in the past three years.
To some extent, the driving force for the soaring profits of China's banking industry comes from large state-owned banks. With the success of financial restructuring of state-owned commercial banks, the profit contribution pattern of China banking industry has changed greatly. State-owned commercial banks have replaced joint-stock commercial banks as the "main" source of banking profits in China. In 2005, the profits of the four state-owned banks accounted for 67.26% of the net profit of the whole industry.
Judging from the distribution pattern of return on owners' equity, in 2005, there were 10 banks in China, which exceeded the industry average and accounted for 36.78% of the total assets of the whole industry. Compared with 2005, when more than 65% of the banks' assets in the European Union earned an average return on owners' equity, there is still a big gap, which reflects the unbalanced distribution of profits in China's banking industry. Different from the distribution pattern of owners' return on net assets, only 4.7% of the total assets of China's banking industry have higher return on assets than the national average, and the vast majority of banks are small banks. The return on assets of medium-sized banks is basically lower than the national average, which shows that the assets of medium-sized banks in China are expanding and transforming, and their profitability needs to be improved.
Statistics show that in the existing asset structure of China's banking industry, credit assets generally account for about 85%, and the average contribution of interest income to bank profits reaches about 90%. In the total operating income of domestic banks, less than 65,438+00% comes from non-interest income, while the charging services such as securities trading, insurance and wealth management only account for a small part of the balance sheet. The simplification of income structure may affect the profit prospect of banks, because the profit of banks in China depends on the amount of credit when they rely too much on interest income. During the macro-economic upswing, the profitability of banks may be very good, but once the economy faces a downturn, bank profits may face the risk of narrowing, because bank credit will shrink sharply. At this time, the quality of bank credit assets may also decline, and non-performing loans will increase, further devouring bank profits. Therefore, although China's banking industry is currently facing a good situation of overall profit growth, the surge in China's banking profits has not passed the test of the economic cycle. Once the economic growth slows down, the scale of bank credit will shrink, non-performing loans will continue to increase with the rapid expansion of credit, and the profit growth rate of the banking industry will face uncertainty and its stability will be greatly reduced.
(4) The bank's liquidity has increased slightly, but it is suspected of excess liquidity.
The business characteristics of "short-term deposit and long-term loan" determine that banks must maintain an appropriate level of liquidity. The stable situation in liquidity in the banking system can not only ensure the smooth operation of the payment and settlement system, but also prevent the financial crisis. Therefore, the liquidity risk management of banks has become an indispensable part of the core business of banks, and it is also an important indicator to measure the stability of the banking industry.
The ratio of current assets to short-term liabilities in banking industry can accurately measure the dependence of banks on market financing. The lower the ratio, that is, the higher the bank's dependence on short-term market financing, the greater its liquidity risk. However, we must clearly realize that the liquidity management styles of banks of different sizes may be very different. The savings funds of small banks mainly come from consumers and depositors, and the sources of funds are relatively stable. Loans are mainly distributed to families and small enterprises. Generally speaking, these small banks have more deposits and less loans, and most of their surplus funds are invested in assets with better liquidity, which is generally higher. In contrast, large banks often adopt a more risky liquidity management model and borrow short-term funds in the interbank market by rolling.
In 2005, the liquidity level of China banking industry improved slightly. Due to the scarcity of bank current assets data, we divide 60 banks into three groups, and calculate the average value of current assets/consumption and short-term deposits in each group, which can reduce the deviation caused by scale differences to some extent. It is estimated that the liquidity ratio (Liquidity) of 60 banks in China.
Assets/customers & Standard time (standard time)
The median funding is 16.67%. The arithmetic mean of liquidity index of four state-owned commercial banks in China is 12.99%, and that of two national joint-stock commercial banks is 16.5 1. The arithmetic mean of liquidity index of the other 44 banks is 24.40%, which is slightly higher than similar indicators in 2004 and 65,438 in the world banking industry in 2005. This also shows that China's banking industry is highly liquid and can withstand the impact of credit expansion, but it also shows that China's banking industry may have excess liquidity to some extent.
Third, the risks facing the stability of China's banking industry.
(A) the rapid expansion of credit, bank credit risk, non-performing loans may rebound.
Encouraged by the high confidence index of entrepreneurs and the increasing profits of banks, China's banking industry has entered a new round of credit expansion since the end of 2005. In the first half of 2006, China's banking sector increased loans by 21800 million yuan, exceeding 87% of the loan plan in 2006. Among them, the scale of new loans in the first quarter and April reached the highest level in history. In the third quarter of 2006, although the speed of new loans slowed down, the accumulated lending of the banking industry in 2006 has exceeded the annual loan plan of 2.5 trillion yuan, reaching 2.69 trillion yuan. The excessive growth of bank credit may indicate the increase of bank credit risk. Once the macro-tightening policy has a chemical reaction, the trend of reducing the balance of non-performing loans in China's banking industry may be interrupted, or even rebound in an all-round way. In addition, the concentration trend of bank credit industry is obvious. More new loans from banks to real estate and other industries are likely to lead to overheating of the economy and eventually lead to overcapacity in some industries. Macro-control of overheated industries will lead to local adjustment of industrial structure, and the credit risk of new bank loans will be further aggravated. According to the disclosure of the China Banking Regulatory Commission, in the first half of this year, the balance of loans in key macro-control industries of China's banking industry was relatively large, accounting for a high proportion, and the balance of non-performing loans in industries with overcapacity and potential overcapacity 1 1 was high. In the first three quarters, the year-on-year growth rate of medium-and long-term loans of commercial banks, represented by the real estate industry, increased from 16.2% at the beginning of the year to 2 1.4 at the end of September. With the implementation of macro-control policies, the trend of rapid economic growth will face a downward trend, and house prices will also face the risk of falling, and the mortgage value of real estate held by banks themselves will decrease, thus offsetting their own capital. The decline of banks' own capital will make banks reduce their credit supply to real estate, thus further pushing down house prices, exposing more credit risk positions and impacting the stability of the banking industry.
(2) The scale of bank securities investment has gradually increased, and the market risk exposure position has increased.
Among all kinds of market risks faced by banks, interest rate risk may be the most important. The banking industry may be affected by interest rate risk in several aspects: on the one hand, it directly affects the value of interest rate-sensitive securities assets held by banks; Second, it indirectly endangers the quality and income of bank credit by affecting the performance of bank customers. At the end of 2004, after the People's Bank of China released the upper limit of loan interest rate of banks (except rural credit cooperatives), the marketization of loan interest rate put forward higher requirements for risk pricing and management of commercial banks. In the case that the pricing power of bank loans in China is generally not high, commercial banks can not fully adapt to the possible impact of interest rate marketization. The fluctuation of interest rate will lead to the rise and fall of bond prices, which will lead to the profit and loss of bank funds.
In recent years, the rapid growth of residents' deposits and the abundance of liquidity in the banking system have forced banks to invest heavily in bonds. According to statistics, in 2005, China's banking bond investment increased by 440 billion yuan, reaching 4.49 trillion yuan, accounting for more than 10% of the total assets of banks. Judging from the current situation in 2006, in the first nine months, China's banking industry added 687 billion yuan in bond investment, and the positions exposed to market risks continued to increase. Due to the unreasonable position structure and the lack of interest rate derivatives market in China, once the interest rate is raised, the bonds held by banks are likely to have interest rate risks.
(c) The benefits of banking reform are uneven, and the capital of some banks is still seriously insufficient.
In the past three years, the government-led reform of state-owned banks has greatly improved the capital adequacy ratio of China's banking industry, but the reform measures have different effects. Major banks and big banks have obviously benefited from the reform, but at the same time some weaknesses of other banks, mainly the capital level, have not been effectively improved. After the financial restructuring, the capital adequacy ratios of the three major state-owned commercial banks and Bank of Communications in China all reached the stable bank level of 10%, and CCB even exceeded the capital adequacy ratio of 12% required by internationally active banks. However, we have noticed that the serious shortage of capital is still a prominent problem in China's banking industry. Even in a loose calculation, the capital adequacy ratio of China's banking industry is obviously lower than that of international banks. According to the new capital supervision standards, traditional items such as special reserves, other reserves and profits of the current year are excluded from the capital, and the loan loss reserves that are not fully accrued are also deducted from the capital. At the same time, regardless of the changes of risky assets at home and abroad, if the overall capital adequacy ratio reaches the minimum requirement of 8%, the capital gap of China's banking industry is still huge. A large number of city commercial banks, rural credit cooperatives and some joint-stock banks still have strong capital demand, but most banking institutions lack effective means to replenish capital. The lack of bank capital not only restricts the development of banking business, but also brings potential hidden dangers to the stability of the whole banking industry.
(D) Insufficient information disclosure is the "invisible killer" of banking instability.
For a long time, the transparency of China's banking information disclosure has been widely criticized by stakeholders. Although the situation has improved since the establishment of the CBRC, some key bank data are still shrouded in fog. Generally speaking, there are two reasons for not disclosing the relevant data: First, the relevant data is really unavailable and cannot be published; Second, the industry quality revealed by relevant data is too poor. Once disclosed, it will cause market panic and endanger the relatively stable financial situation at present. The experience of banking crisis and financial crisis since 1990s shows that an opaque banking system is more likely to attract unnecessary speculation and speculation from the outside world, thus causing panic among market participants. Transparent, comprehensive, accurate and timely information disclosure can give confidence and credibility to the banking system and ensure the banking industry to operate in a more stable way. In fact, this is also to give part of the rights of bank supervision to bank stakeholders or the wider public, so that banks can operate more efficiently and steadily.
Fourthly, the overall evaluation of China's banking stability.
Since 2005, China's macro-economy has maintained a sustained, rapid and stable development. With the full support of the government, China's state-owned commercial banks have made a breakthrough, and four of the five major commercial banks have completed capital restructuring and listed in Hong Kong. Some joint-stock commercial banks have introduced strategic investors and are actively preparing for overseas listing. Similar reforms have also been extended to city commercial banks, village banks and credit cooperatives, and reform and supervision measures have been introduced to strengthen bank operations and reduce system risks, and the risks of the entire banking industry have been alleviated to a considerable extent. Driven by the banking reform passively stimulated by the opening-up of the banking industry, the capital adequacy ratio of some banks in China has increased significantly, the non-performing assets of the whole industry have achieved a "double decline", the overall profitability is considerable, the provision for non-performing loans has steadily increased, the liquidity level of banks has further improved, and the overall stability level of the banking industry has steadily improved, which is in line with the rating conclusions of Moody's and other international rating agencies on China's banking industry (see the table below). However, there are still some "flaws" on the smooth surface of overall stability: the capital level of some banks is seriously insufficient; The absolute amount of non-performing assets in the whole industry is still huge, and the overall proportion is still high; The sustainability of the overall profitability of the banking industry needs time to test, and there is still a big gap in the provision for non-performing loans. At the same time, China's banking industry still faces challenges such as credit risk, interest rate risk and systemic risk caused by opaque information disclosure, and the task of maintaining bank stability is still arduous.