Upbeat view on asset quality

Data from the China Banking Regulatory Commission showed bad loans rose by 22.4 billion yuan ($3.59 billion) from July to September to 478.8 billion yuan, and the NPL ratio stood at 0.95 percent by the end of September, up 0.01 of a percentage point from three months earlier.

In addition, the potential risks and issues underlying the rapid development of the wealth-management business have also attracted bankers' attention.

The survey showed that 51 percent of bankers believe that such products would result in higher levels of off-balance sheet assets, which could affect the asset quality and operational stability of banks, although 80 percent support the development of such business.

About 70 percent of bankers expect that the growth rate of bank revenue and profit over the next three years will be lower than 20 percent, and expanding the scale of interest-earning assets is the most powerful motivating factor for future profit growth.

More than 60 percent said they believe the government should promote interest rate liberalization, a key factor affecting bank profitability, for at least three years.

Ma Weihua, president of the China Merchants Bank Co Ltd, said it's getting more difficult to replenish capital given current bank earnings levels, and growing pressure from shareholders on dividends.

Du Jinfu, a vice-chairman of CBRC, said on Wednesday: "Banks will continue to suffer from great capital supplement pressure in the next 10 years, if we calculate the credit growth at 12 percent."

Despite lower profit growth and increasing capital pressure, bankers' appetite for overseas markets has not changed, with two-thirds saying Chinese lenders should expand their business abroad, according to the survey.

And North America has surpassed Europe as the most popular destination among bankers, with nearly 65 percent saying the region now is their No 1 choice.

Optimism about the US economy might be the explanation. Nearly 73 percent believe US economic growth will remain the same or improve, but 87 percent said growth in the 17-nation eurozone will slow down, or that the bloc will fall into recession.

And bankers were divided into two basically equal camps in terms of confidence in growth of emerging markets.

wangxiaotian@chinadaily.com.cn

 

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