It’s the end of the mid-year reporting season. In the first half of this year, the net profits attributable to parent company shareholders of the 33 A-share listed banks exceeded 893.6 billion yuan. Among them, the four major state-owned banks of China Industrial, Peasants and China Construction Bank once again showed strong performance. "Making money" ability, the net profit attributable to the parent company exceeds 100 billion, with a total of 557.6 billion yuan, accounting for 62%.
All four banks are also among the latest top ten list of the top 500 Chinese companies in 2019. Among them, Bank of China has the smallest net profit attributable to its parent company (114.048 billion yuan). Its profitability is also three times that of Sinopec and Moutai. 5 times. However, compared with last year's semi-annual report, the growth rate of net profit attributable to parent companies of the four major banks has all slowed down.
Net interest income still contributed 60 to 70% of the revenue of the four major banks. In the first half of the year, interest spreads narrowed. At the same time, driven by scale, the four major banks’ net interest income increased year-on-year. This maintained the Performance growth of the four major banks.
In terms of asset quality, while the scale of loans continues to rise, the non-performing ratios of the four major banks have all declined. According to the mid-term reports of many banks, the manufacturing, wholesale and retail industries have become areas with high incidence of NPLs, and the Northeast region has a higher bad debt rate than other regions.
The four major banks dominate the top four profit lists of A-share listed companies
Every financial reporting season, the earning power of "big profit" financial institutions is a hot topic. In the first half of this year, the net profit attributable to parent company shareholders of the 33 A-share listed banks exceeded 893.6 billion yuan, of which 62% was contributed by the four major state-owned banks. The total net profit attributable to the parent company of the four major state-owned banks in the first half of the year was 557.6 billion yuan, with a daily profit of 3 billion yuan.
Among the four major state-owned banks, the one with the highest net profit attributable to the parent company is the Industrial and Commercial Bank of China, known as the "Universal Bank". The financial report shows that in the first half of this year, ICBC achieved a net profit attributable to the parent company of 167.931 billion yuan. The report cards handed over by Agricultural Bank of China, China Construction Bank, and Bank of China were 121.445 billion yuan, 154.19 billion yuan, and 114.048 billion yuan respectively, all of which were smaller than ICBC.
With their strong earning power, the four major state-owned banks also ranked "highest among the others" in the 2019 list of China's top 500 companies. In terms of operating income, Sinopec ranked first, and the four major banks of Industry, Construction, Agriculture, and China were all in the top ten, ranking fifth, seventh, eighth, and tenth respectively. Among them, Bank of China ranked eleventh in 2018. The ranking rose to tenth this year, and the other three banks were in the top ten in 2018; in terms of net profit attributable to parent companies, according to statistics from Oriental Fortune Choice, in the first half of 2019, the four major banks occupied the top four on the list, among which Bank of China, which has the lowest net profit as a parent company, has a net profit attributable to its parent company that is three times that of Sinopec and five times that of Moutai.
Due to a relatively large base, the growth rate of net profit attributable to parent companies of the four major state-owned banks in the first half of the year did not exceed 10%. Among the 33 A-share listed banks, 12 had a growth rate of less than 10%. Specifically, the growth rates of ICBC, Agricultural Bank of China, China Construction Bank, and Bank of China were 4.67%, 4.88%, 4.87%, and 4.55% respectively. Agricultural Bank of China, which once had the lowest growth rate, overtook it and took the lead among the four major banks. However, compared with last year's semi-annual report, the growth rate of net profit attributable to parent companies of the four major banks has slowed down.
The interest spread narrowed, and net interest income still increased due to scale
In terms of operating income, ICBC achieved revenue of 442.915 billion yuan in the first half of the year, a year-on-year increase of 14.3%; Agricultural Bank of China achieved operating income of 3231.79 yuan billion, a year-on-year increase of 5.50%; China Construction Bank achieved operating income of 361.471 billion yuan, a year-on-year increase of 6.08%; Bank of China achieved operating income of 276.733 billion yuan, a year-on-year increase of 10.06%.
Net interest income is still an important source of income for the four major banks. Data show that in the first half of the year, the year-on-year growth rate of net interest income of the four major banks all showed an upward trend, contributing 60%-70% of operating income. Among them, ABC’s net interest income in the first half of the year increased by 3.799 billion yuan year-on-year to 237.632 billion yuan, accounting for 73.5% of the operating income in the first half of the year, ranking first among the four major banks, and is the only bank with net interest income accounting for more than 70%.
In the first half of the year, the narrowing of interest spreads was more obvious among the four major banks. When explaining the year-on-year decline in net interest margins in its financial report, Agricultural Bank of China mentioned that one of the main reasons was the increase in credit lending in areas such as inclusive finance and poverty alleviation.
Since the beginning of this year, the People’s Bank of China has carried out three rounds of targeted reserve requirement ratio cuts, which were implemented in stages in January, April, May, June and July, releasing trillions of funds to private small businesses. Micro-enterprises "quench their thirst"; recently, the People's Bank of China announced that it will reform and improve the formation mechanism of the loan market quotation rate (LPR), further smoothen the monetary policy transmission mechanism, and reduce the financing costs of the real economy.
This means that it is the increase in business scale that drives the growth in net interest income.
In terms of financial management business with non-interest income, the China Banking and Insurance Regulatory Commission issued new financial management regulations in the second half of last year to promote the establishment of professional subsidiaries by commercial banks. Up to now, all the financial management subsidiaries of the four major banks have been approved to open (BoC Financial Management under the Bank of China and ABC Financial Management under the Agricultural Bank of China both opened in July). However, there is not much relevant performance in the financial reports of the four major banks. Only ICBC disclosed At the end of June 2019, ICBC Wealth Management had total assets of 16.112 billion yuan, net assets of 16.081 billion yuan, and a net profit of 81 million yuan in the first half of the year.
Both the scale and proportion of loans to the real estate industry have increased
The Beijing News reporter noticed that in the first half of 2019, the four major state-owned banks increased their efforts to serve key areas of the real economy. , the scale of loans to the real estate industry also increased slightly, and the proportion of total loans also increased.
Among the corporate loans and advances of the Agricultural Bank of China in the first half of the year, 708.297 billion yuan was invested in the real estate industry, an increase of 14% from the end of the previous year, accounting for 9% of the corporate loans and advances, which was also an increase from the end of last year. 0.4 percentage points; China Construction Bank's loans and advances to the real estate industry in the first half of the year were 551.92 billion yuan, which was also slightly higher than the scale at the beginning of the year, accounting for 3.81% of all loans, an increase of 0.1 percentage points from the beginning of the year; ICBC's corporate loans in the first half of the year totaled 8.44 trillion yuan Yuan, of which 651.052 billion yuan was invested in the real estate industry, accounting for 7.7%, an increase of 0.3 percentage points from the beginning of the year; among the corporate loans and advances of the Bank of China in the first half of the year, 997.2 billion yuan was invested in the real estate industry, accounting for 7.96%, an increase of 0.3 percentage points from the beginning of the year. An increase of 0.19 percentage points.
The four major banks all stated in their financial reports that they will implement national real estate control policies and regulatory measures and strengthen real estate loan risk management.
As a major player in the housing loan field, China Construction Bank was also asked relevant questions at the interim results meeting. The financial report shows that the balance of real estate development loans of CCB in the first half of the year was 391.093 billion yuan, an increase of 25.439 billion yuan from the end of the previous year. This coincides with recent news that many banks will tighten loan limits for real estate development from now on. Ji Zhihong, Vice President of China Construction Bank, responded that China Construction Bank has been strictly implementing the requirement of "housing is for living, not for speculation". In the first half of the year, the growth rate of real estate development loans dropped by 6.55 percentage points year-on-year, and the corresponding non-performing rate was 0.81%, down 0.3 percentage points from the beginning of the year. . In the next step, CCB will continue to follow the real estate control policies, further strengthen access standards, strictly implement regulatory policies, ensure compliance of real estate development loans, and strengthen supervision of fund use.
The non-performing loan ratios of the four major banks all fell, and the bad loan ratios were relatively high in some areas
The interim report showed that while the four major state-owned banks adjusted their loan structures, their non-performing loan ratios all dropped.
The Agricultural Bank of China, whose non-performing loan ratio exceeded 2% at the end of the third quarter of 2015, had a non-performing loan ratio of 1.43% at the end of the first half of this year, a decrease of 0.16 percentage points from the beginning of the year. In addition, the balance of non-performing loans of Agricultural Bank of China was 185.312 billion yuan, a decrease of 4.690 billion yuan from the end of the previous year. It was the only bank among the four major banks to have a "double decrease" in non-performing loans.
Where do non-performing loans come from? In terms of industries, except for the Bank of China, which did not disclose the scale of non-performing loans by industry, industries with higher bad debt rates in ICBC, China Construction Bank, and Agricultural Bank of China all include manufacturing, wholesale, and retail industries. As of the end of June this year, the non-performing ratio of ICBC corporate loans to the manufacturing industry reached 5.82%, the non-performing ratio of loans to the wholesale and retail industries was 9.31%, and the non-performing ratio of loans to the leasing and business services industries was 0.63%. The loan non-performing rate of the public facilities management industry is only 0.15%.
In addition to industry factors, regional factors also have an obvious impact on adverse effects. Among the three banks that disclosed relevant data, ICBC's loans to the Northeast region were 786.077 billion yuan at the end of the first half, an increase of about 27 billion yuan from the end of last year, with a non-performing rate of 3.45%; the balance of loans in the Bohai Rim region was 2.66 trillion yuan, with a non-performing rate of 3.45%. 2.23%; the loan balance in the Yangtze River Delta region is 3.01 trillion yuan, and the non-performing rate is 0.8%.
The balance of loans and advances invested by China Construction Bank in the Yangtze River Delta, Pearl River Delta, Bohai Rim region, central region, and western region are all around 2.5 trillion yuan, and the balance of loans invested in the northeastern region is 737.768 billion yuan, all of which are larger than at the beginning of the year. A slight increase. The highest defective rate is in the Northeast region, reaching 3.13%, the Yangtze River Delta has a defective rate of 1.02%, and the Bohai Rim region has a defective rate of 1.84%.
Dong Ximiao, chief researcher of Xinwang Bank and distinguished researcher of the National Finance and Development Laboratory, told the Beijing News reporter that the highlights of my country’s banking industry development in the first half of the year include: significant improvement in services to the real economy and optimization of the credit structure ; The non-performing loan ratio has generally declined, the growth rate of non-performing loan balances has slowed down, and asset quality has stabilized. But he also proposed that the recovery in bank performance in the first half of the year should be viewed calmly.
He said that in the future, the macro situation will be complex and changeable, regulatory policies will continue to be tightened, and interest rates and exchange rates will gradually become market-oriented. At present, it is necessary to conduct in-depth research on the impact of the new loan market quotation rate (LPR) mechanism, adjust and optimize the asset and liability structure, and strengthen interest rate risk management; improve the construction of the risk pricing system, enhance risk pricing capabilities, and consolidate the foundation and ability to respond to internal and external changes.
As for the decline in the non-performing ratio, Dong Ximiao analyzed that the main reason is that listed banks have increased their efforts to write off non-performing loans. "In the first half of this year, commercial banks continued to increase the write-off of non-performing loans. At the same time, they also actively dealt with non-performing loans and alleviated development burdens by increasing recycling, packaging and transfer, and securitization of non-performing loans."
However, He also said that in the future, real estate bubbles, local government debts, etc. will be key areas of financial risk prevention and control, and the pressure to maintain stable asset quality will still be great. Risk prevention awareness and capabilities should be further improved.
■ Extension
How much impact does LPR reform have on net interest margin?
At the interim results meeting, many banks were also asked about the impact of LPR reform on net interest margin. influence. ICBC President Gu Shu said that the LPR reform has limited impact on ICBC’s net interest margin because ICBC has promoted and applied the LPR mechanism within the bank since its launch in 2013. In the first half of this year, newly issued loans priced at LPR accounted for 1% of all new loans issued. 48%, reaching 1.4 trillion yuan, especially the corporate loan application LPR is already very familiar.
CCB Chief Financial Officer Xu Yiming also responded at the performance meeting that CCB has conscientiously implemented the central bank’s LPR “358” requirements, and so far 56% of newly issued loans have used LPR. The so-called "358" means that as of the end of September this year, the proportion of new loans issued by banks using LPR as the pricing benchmark will be no less than 30%; as of the end of December, the above proportion will be no less than 50%; as of the end of March next year, the above proportion will The proportion is no less than 80%.
He also said that there is not much difference between CCB's current loan pricing level and the loan pricing level based on LPR, which is about 5bp. According to calculations, the impact on CCB's net interest income before the end of the year will be less than 100 million Yuan or so. If existing loan interest rates are also adjusted starting next year, the pressure on banks' net interest income will increase, but overall it will remain relatively stable.