Improved support for the real economy and resilient profitability are two of the key takeaways of a new report from the peak body for the Chinese banking sector on the state of the country’s A-share lenders.
The China Banking Association (CBA) recently released the “China Listed Bank Analysis Report 2021” (中国上市银行分析报告2021), which provides a comprehensive assessment of the performance of 54 listed Chinese banks in 2020 based on 21 indices spread across the five main themes of “scale, structure, benefit, efficiency and risk.”
Key takeaways from the report included:
- Ongoing improvement to assets and operations structure, strengthening of the ability to service the economy. According to the report listed Chinese banks have continued to expand their lending capabilities, while interbank loans and non-standard assets have come under pressure, further raising the ability of lenders to “service the real economy.” As of the end of 2020, the total loan and advances balance of 54-listed Chinese banks was 121.39 trillion yuan, for a YoY rise of 12.27%. Loan assets saw their share rise to 50.72%, for an increase of 2.12 percentage points compared to the previous year, while interbank assets and securities investments saw their share fall to 38.3%, for a decline of 1.41 percentage points compared to the end of the previous year.
- Overall deposit scope maintains stable growth, liability structure has further improved. The report said that listed banks have “actively responded to more intense deposit competition and even stricter regulatory requirements,” diversifying deposit sources and maintaining the stability and growth of deposits. As of the end of 2020, the total deposits of 54 listed banks was 149.40 trillion yuan, for YoY growth of 10.15%. Deposits accounted for a 70.74% share of liabilities, for an increase of 1.04 percentage points compared to the end of the previous year. Bonds payable accounted for a 11.14% share, for a decline of 1.64 percentage points.
- Profitability has maintained resilience, alongside active ceding of profits to the real economy. In 2020 the operating revenues of 54 listed Chinese banks was 5.57 trillion yuan for YoY growth of 4.93%, despite the turmoil created by the COVID-19 pandemic. Net profits were 1.76 trillion yuan, for YoY growth of 0.10%. According to the report listed banks are also actively seeking to reduce enterprise financing costs, and help the huge swathe of small businesses and individual proprietors in China weather the impacts of the pandemic. In 2020 Chinese banks provided payment deferrals on 6.6 trillion yuan in loans, as well as “transferred” 1.5 trillion yuan in profits to the real economy.
- Continued advance of retail finance transformation, rapid growth in wealth management operations. The report said that listed banks have focused on personal deposit operations and driven improvement to the quality of retail finance. As of the end of 2020 the personal deposit balance of 54 listed banks was 66.19 trillion yuan, for YoY growth of 13.48%, marking an acceleration of one percentage point compared to the previous year, and growth 3.33 percentage points higher than overall deposit growth. Out of 26 listed banks that have revealed their AUM figures, ICBC had the largest AUM at 16 trillion yuan.
- Rapid growth in financial inclusion, support for pandemic and poverty alleviation measures. Chinese banks expanded micro-and-small enterprise lending at the behest of regulators seeking to overcome the economic challenges created by the COVID-19 pandemic. At the end of 2020 the financial inclusion loan balance of 43 listed banks that have released related data stood at 8.43 trillion yuan, for YoY growth of 41.9%, 11.34 percentage points of average growth in banking operations.
- Support for meeting peak carbon and carbon neutrality targets. In 2020 China set the carbon mitigation targets of achieving peak carbon by 2030 and carbon neutrality by 2060. As of the end of 2020 43 listed Chinese banks that released related data had a green loan balance of 8.86 trillion yuan, for YoY growth of 23.88%. The domestic and foreign currency green financing balance of China’s main financial institutions was 11.95 trillion yuan, putting them in first place globally.
- Actively driving bank digital transformation, continuing to expand the vigour of tech investments. In 2020 the IT investments of Chinese banking sector financial institutions totalled 207.8 billion yuan while those of the big six state-owned banks were 95.686 billion yuan. The IT investments of China’s large-scale banks and joint-stock banks accounted for a 3.19% share of operating revenues on average, while tech R&D personnel accounting for a 5.60% share of staff teams.