A new report from the peak industry body for China’s banking sector sheds light on the state of the country’s municipal commercial lenders.
The China Banking Association recently released the “Municipal Commercial Bank Development Report (2018)” (城市商业银行发展报告(2018)), which pointed to stable operation and marked business differentiation amongst private lenders.
According to the report as of the end of 2017 the assets of municipal commercial banks were 31.72 trillion yuan, while their debts hit 29.53 trillion yuan for “steady growth” on both sides of the balance sheet.
Asset quality held steady with the non-performing loan (NPL) rate standing at 1.52%, while the coverage ratio was 214.5% and the capital adequacy ratio 12.75%.
According to the report support for the real economy provided by China’s municipal commercial banks is continuing to expand, with the loan balance rising by 18.5% compared to the start of the year to hit 12.03 trillion yuan.
Loans made by municipal commercial banks to small and micro-enterprises rose 19.5% to reach 5.39 trillion yuan.
The report further points out that municipal commercial banks are actively embracing fintech and engaging in digital transformation of their operations, procedures and management, in order to reshape their frameworks and reduce operating costs.
According to the report these efforts are leading to “optimisation of traditional online banking and mobile banking; the creation of internet finance platforms, the establishment of online and on-premise channels and the full vigour creation of smart banks.
Municipal commercial banks are seen “actively co-operating with internet enterprises, enriching financial innovation models, and driving the innovative development of their own businesses.”