The non-performing loan ratio of financial institutions is one of the important indicators to evaluate the security of credit assets of financial institutions. The high rate of non-performing loans shows that financial institutions are at great risk of recovering loans; The low rate of non-performing loans shows that the risk of financial institutions recovering loans is small. Calculation formula Non-performing loan ratio = (sub-prime loan+doubtful loan+loss loan)/various loans × 100% The five-level classification standard of loans is based on the Guiding Principles for Loan Risk Classification (Yinfa [20065438+0] No.416) and the Notice on Promoting and Improving Loan Risk Classification (Banking Supervision)
A normal loan is defined as the borrower's ability to perform the contract, and there is no sufficient reason to suspect that the loan principal and interest cannot be repaid in full and on time. The definition of concern loan is that although the borrower has the ability to repay the principal and interest of the loan at present, there are some factors that may adversely affect the repayment. Subprime loan is defined as the borrower's repayment ability has obvious problems, and it is impossible to repay the loan principal and interest in full by relying entirely on its normal operating income. Even if the guarantee is implemented, it may cause certain losses. The definition of suspicious loan is that the borrower can't repay the loan principal and interest in full, even if the guarantee is implemented, it will definitely cause great losses. Loss loan refers to a loan whose principal and interest cannot be recovered or only a small part can be recovered after all possible measures or all necessary legal procedures are taken. After classifying all kinds of loans, the following three types of loans are classified as non-performing loans.
Various loans refer to the assets formed by banking financial institutions issuing monetary funds to borrowers. It mainly includes loans, trade financing, bill financing, financial leasing, buying resale assets from non-financial institutions, overdrafts and various advances. Since the implementation of the five-level classification of loans in China, the regulatory authorities have assessed the asset quality of commercial banks and their superior banks to their subordinate banks as a double decline in the amount of non-performing loans and the non-performing rate, which is the so-called "double decline". In particular, one of the three main conditions for the listing of the four major state-owned commercial banks is that the non-performing loan ratio must be lower than 10.6%. Faced with many unfavorable financial ecological environments to deal with non-performing loans, some commercial banks "try their best" to expand the loan scale and "dilute" a large number of non-performing loans, thus achieving the goal of rapidly reducing the non-performing loan ratio. Especially in 2003, the effect of "dilution" of non-performing loans by Chinese commercial banks was very obvious, and it broke through the credit scale of financial institutions announced by the central bank for the second time, with 2.99 trillion yuan of new loans in the whole year, which was 1. 1 trillion yuan higher than the scale determined by the central bank at the beginning of the year, and the non-performing loan ratio dropped significantly compared with the beginning of the year. The result of a large number of loans from commercial banks is to help China's economy overheat, which may also lead to a large number of non-performing loans from commercial banks, forcing the central government to adopt macro-control. According to preliminary estimates, in 2003, China Commercial Bank will add 654.38 billion yuan of non-performing loans due to blind lending. In order to reasonably evaluate the asset quality of commercial banks and avoid blindly expanding the loan scale in order to reduce the non-performing loan ratio, it is necessary to correctly measure the real contribution of numerator and denominator in the decline of the non-performing loan ratio, that is, the influence of non-performing loans and loan changes on the non-performing loan ratio.
Factors of declining non-performing loan ratio of commercial banks
Note: Commercial banks include state-owned commercial banks, joint-stock commercial banks, city commercial banks, rural commercial banks and foreign banks.
Through factor decomposition, in the first half of 2005, the decline of non-performing loan ratio of commercial banks in China mainly came from molecular factors, that is, the reduction of non-performing loans, and denominator factors, that is, the loan dilution effect was less. Among them, the reduction of non-performing loans reduced the non-performing loan ratio by 3.79 percentage points, with a contribution rate of 91.5%; The increase in loans reduced the NPL ratio by 0.35 percentage points, with a contribution rate of 8.5%. From the perspective of banking institutions, the increase in loans of city commercial banks led to the decrease of NPL ratio by 1.06 percentage points, and the decrease of NPL ratio by 0.2 percentage points, of which the contribution rate of loan expansion to the decrease of NPL ratio was 84. 1%. The reduction of non-performing loans in joint-stock commercial banks decreased the non-performing loan ratio by 0.22 percentage points, while the increase of loans decreased the non-performing loan ratio by 0.08 percentage points, of which the reduction of non-performing loans contributed 73.3% to the decrease of non-performing loan ratio. If we don't consider the policy divestiture and financial restructuring of NPLs of 619.5 billion yuan caused by the shareholding system reform of China Industrial and Commercial Bank, the decline of NPL ratio of the four major state-owned commercial banks mainly comes from molecular factors, that is, the decline of NPL ratio. Among them, the decrease of non-performing loans led to a decrease of 5.6 1 percentage point, and the decrease of loans led to an increase of 0. 16 percentage point. [2] Excluding the impact of ICBC's divestiture and financial restructuring, the increase of non-performing loans in commercial banks led to an increase of 0.44 percentage points, while the increase and dilution of non-performing loans led to a decrease of 0.62 percentage points, which reduced the non-performing loan ratio by 0. 18 percentage points. The increase in non-performing loans of state-owned commercial banks increased the non-performing loan ratio by 0.58 percentage points, while the increase in loans decreased the non-performing loan ratio by 0.52 percentage points, which together increased the non-performing loan ratio by 0.06 percentage points.
Capital adequacy ratio (CAR), also known as capital risk (weighted) asset ratio and capital to risk (weighted) asset ratio (Crar).
Is the ratio of bank assets to their risks. National regulators track the capital adequacy ratio of banks to ensure that banks can absorb certain risks.
capital adequacy ratio
Capital adequacy ratio (capital adequacy ratio)
Capital adequacy ratio refers to the ratio of total capital to total weighted risk assets. The capital adequacy ratio reflects the extent to which commercial banks can bear losses with their own capital before depositors and creditors suffer losses. The purpose of setting this index is to curb the excessive expansion of risky assets, protect the interests of depositors and other creditors, and ensure the normal operation and development of financial institutions such as banks. Financial management authorities in various countries generally control the capital adequacy ratio of commercial banks, with the aim of monitoring the ability of banks to resist risks.
Capital adequacy ratio has different calibers. The main ratios are the ratio of capital to deposits, the ratio of capital to liabilities, the ratio of capital to total assets and the ratio of capital to risky assets. As the basis of international banking supervision, Basel Accord stipulates that the capital adequacy ratio is measured by the ratio of capital to risk-weighted assets, and its target standard ratio is 8%.
Commercial capital adequacy ratio
Capital of commercial banks includes core capital and secondary capital.
Core capital includes paid-in capital, capital reserve fund, surplus reserve fund and undistributed profit, and secondary capital refers to loan reserve. When calculating the total capital, the following parts shall be deducted from the core capital and secondary capital of commercial banks:
(1) Expenditure on foreign exchange purchase;
(2) Capital investment in banks and financial subsidiaries with non-parallel accounts;
(3) Capital investment in other banks and financial institutions;
(4) The part of bad debt loss that has not been written off.
Weighted risk assets are assets calculated according to risk weights (weights). Annex II 1994 "Interim Provisions on Capital Composition and Asset Risk Weight" of the Notice on Implementing Asset-Liability Ratio Management of Commercial Banks issued by the People's Bank of China in February classifies financial assets into six categories: cash, credit granted by the central and people's banks, creditor's rights to public enterprises, loans to ordinary enterprises and individuals, interbank lending and residential mortgage loans, and sets the risk authority according to the risk degree. Risk weights are divided into five categories: 0%, 10%, 20%, 50% and 100%, and the weighted risk assets of commercial banks are calculated.
In addition to the provisions of the Commercial Bank Law on the capital adequacy ratio of commercial banks, the People's Bank of China clearly stipulates the capital adequacy ratio index of commercial banks in the Interim Monitoring Index of Asset-Liability Ratio Management of Commercial Banks: the ratio of total capital to total weighted risk assets is not less than 8%, and the core capital is not less than 4%. Tier 2 capital shall not exceed 100% of core capital. That is, the ratio of the end-of-month average balance of total capital to the end-of-month average balance of weighted risk assets should be greater than or equal to 8%; The ratio of the end-of-month average balance of core capital to the end-of-month average balance of weighted risk assets should be greater than or equal to 4%.
computing formula
There is a lot of jargon in this paragraph that needs further detailed explanation.
Capital adequacy ratio ("CAR") is an index to measure the ratio of bank capital to its weighted risk, expressed as a percentage.
A car is defined as:
CAR= assets/risks
The risk can be the weighted asset risk (a) or the minimum total asset requirements stipulated by the respective national regulatory agencies.
If weighted asset risk is used, then
CAR = {T 1 + T2}/a ≥ 8%。 [ 1]
The latter inequality is the standard requirement of national regulatory agencies.
T 1 T2 are two types of assets that can be included in the total amount: the first type of assets (actually contributed owners' equity plus undistributed profits), that is, assets that banks can eliminate risks without stopping trading; As for the second type of assets (preferred stock plus 50% subordinated debt), assets that can resolve risks can be closed down for liquidation, with relatively little protection for depositors.
for instance
According to local regulations, there is no risk in cash and government bonds, 50% in residential mortgage loans and 0/00% in all other types of assets.
Bank A owns 100 unit assets, which are composed as follows:
* Cash: 10
* Government bonds: 15
* Mortgage loan: 20
* Other loans: 50
* Other assets: 5
Suppose again that Bank A has 95 units of deposits. According to the definition, owner's equity = assets-liabilities, that is, 5 units.
The weighted asset risk of Bank A is calculated as follows:
Cash 10 * 0% = 0
Government bonds 15 * 0% = 0
Mortgage loan 20 * 50% = 10
Other loans 50 * 100% = 50
Other assets 5 * 100% = 5
Total weighted asset risk 65
Owner's equity 5
Core asset adequacy ratio (T 1/ weighted asset risk) =7.69%
Although the debt owner's equity ratio of Bank A seems to be as high as 95: 5, that is, the asset-liability ratio of 95%, its core asset adequacy ratio is high enough. This bank is less risky because some of its assets are less risky than others.