Q4 Data Shows Liquidity Ample, Risk Under Wraps: China Banking Regulator


The China Banking Regulatory Commission said that banking sector operations are currently stable and risk is under control at a press conference held on 9 February for the release of key 2017 Q4 regulatory indices.

Xiao Yuanqi (肖远企) CBRC’s head of prudential regulation office, said that as of the end of 2017 China’s banking sector domestic and foreign currency assets were 252 trillion yuan, for a year-on-year increase of 8.7%, and a growth deceleration of 7.1 percentage points.

Loan assets posted YoY growth of 12.4% to reach 129 trillion yuan, while total banking sector liabilities grew by 8.4% to reach 233 trillion yuan, and deposits grew by 7.8% to reach 147 trillion yuan.

“This indicates that the banking sector is returning to the source, and that a focus in primary operations is becoming evident,” said Xiao.

“The trend for banking sector funds to move from the substantial to the empty has seen some initial curbing.”

Xiao said that various measures of liquidity remained “extremely stable” and ample with the banking sector liquidity ratio around twice as high as the regulatory benchmark at 50.03%.

The RMB excess reserves ratio was 2.02% as of the end of 2017, while the loan-deposit ratio was 70.55%, and the liquidity coverage ratio was 123.26%.

Xiao said that the asset profit ratio and capital profit rates ratio of the Chinese banking  sector were ahead of international levels, at 0.92% and 12.56% respectively.

Xiao nonetheless warned of multiple imbalances in the sector that could serve to exacerbate risk .

“Overall, banking sector operations are currently stable and risk is under control, but there exist a number of problems with imbalances,” he said.

“The first is institutional imbalances, the second is imbalances between the regions and areas, the third is disparities in the risk for different operating areas, and the fourth  is disparities in the management levels of banks.

“Our regulatory methods and regulatory tool box is ample. We have pressure tests for the various operations of banks under different conditions.

“With respect to risk emergency plans, we have a series of measures and methods for alleviating and dissolving risk…[our] ‘ammunition’ is very ample for commercial banks to resist risk.”