Listed banks in the A-share market continue to provide high-level support to key areas and weak links in China’s economy, experts said.
The credit structure of these banks shows that they are strengthening industries, expanding financial inclusion, spurring green growth and promoting the steady development of agriculture, industry watchers said.
China’s six largest state-owned commercial banks by assets – the “Big Six” – issued loans and advances worth about 95 trillion yuan ($13.06 trillion) to their customers as of late September , up about 9.6 trillion yuan from the end of last year, according to their recently announced financial results for the third quarter.
Advances refer to money provided by lenders to customers to meet their short-term demands.
The Industrial and Commercial Bank of China, the country’s largest public commercial lender, said its infrastructure loan balance in the first three quarters had increased by more than 640 billion yuan since the start of this year.
During the same period, its manufacturing loan balance increased by more than 810 billion yuan, green loan balance increased by about 950 billion yuan, and inclusive loan balance increased by more than 410 billion. billion yuan.
Banks are expected to maintain high loan growth over the next one or two quarters, said Ma Tingting, an analyst at Guosheng Securities.
With the continued implementation of policies aimed at stabilizing economic growth, China’s banking sector will continue to increase lending to infrastructure projects and the manufacturing sector in the fourth quarter, thanks to the implementation of currency-based financial instruments. previously launched policies, Ma said.
Liang Si, a researcher at the BOC Research Institute, said: “Finance demand from the real economy has picked up since the start of the third quarter. In particular, business demand for medium and long-term credit has improved.
At the end of the third quarter, the outstanding balance of medium and long-term loans to enterprises and public institutions increased by 12.7% year on year to reach 83.860 billion yuan, an acceleration of 0.7 percentage point compared to compared to the first half, according to the People’s Bank of China, the central bank.
“In September, new medium and long-term business loans accounted for 54.6 percent of new yuan loans, reaching the highest proportion since the beginning of this year. This will effectively help the Chinese economy achieve a steady recovery and an accelerated recovery,” he added. Liang said.
Ye Yindan, another researcher from the BOC Research Institute, said: “China will maintain market liquidity at a reasonably sufficient level by taking possible measures such as reductions in the reserve requirement ratio and open operations. market to stabilize the size of bank loan issues and secure the measures taken. the financing of the real economy.”
In addition to encouraging financial institutions to continue to strengthen their support for green and high-tech industries, China will also step up policies aimed at maintaining stability in the operations of market entities. Actions such as increasing the inclusive lending quota for micro and small enterprises are likely to be taken to ease the pressure of small business capital flows, Ye said.
Liu Zhiping, an analyst at Huaxi Securities, said credit allocation in the third quarter was heavily policy-driven, with a larger year-on-year increase in lending to key areas of the economy, such as as the manufacturing sector, micro and small enterprises. , and green industry.
Listed Chinese banks posted continued growth in the first three quarters amid an overall improvement in their asset quality despite pressure on their operating income. During the period, 42 A-share listed banks saw an 8 percent year-on-year increase in their combined net profit, Liu said.
The Big Six said their total net profit attributable to bank shareholders exceeded 1 trillion yuan in the first three quarters.
Excluding Postal Savings Bank of China, net profit growth of the other five major banks ranged from 5.47% to 6.52%, while PSBC recorded the highest net profit increase of 14.48% among Big Six.
Given that A-share market-listed banks have adequately priced in loan impairments, their full-year profit growth is expected to hold steady at around 8%, said Xiao Feifei, an analyst at CITIC Securities.
As the economy is still relatively weak, asset quality will remain critical to bank earnings growth. Quality banks will see steady profit growth, thanks to accelerated disposal of non-performing assets, better customer structure and strict risk management, said Ma of Guosheng Securities.