This Year, The Banking Sector'S Profit Growth Will Reach About 20%.

The China Banking Industry Development Report (2010-2011), issued by the China Banking Association 29, reminds banks that the bad loan rate will remain stable this year, but it will be more difficult to maintain the downward trend of non-performing loans.

The banking sector will continue to operate steadily this year, and the driving force for bank profit growth will be flat, and the profit growth rate will reach about 20%.

In the past few years, China

From the external environment, there may be a slight rebound in the rate of bad loans generated by banks.

First, the impact of high inflation on the current macro-economic development will continue, coupled with real estate regulation, structural adjustment, energy saving and emission reduction, and the differentiation of profits will become increasingly obvious. Aggregate and structural factors will pose certain challenges to the quality of bank loans. Two, asset price inflation will slow down and may even fall locally. Three, with the further promotion of the liquidation of local financing platforms, although a large number of platform loans will operate in the form of corporate loans, it is not ruled out that some platform projects will form a small amount of new non-performing loans.

The report also points out that

On the one hand, the reclassification of platform loans will not substantially increase the bad loans of banks.

According to the data of banking industry, the proportion of platform loans to total loans is about 10%, and the proportion of platform loans that can be converted to corporate loans through standardized and liquidation is estimated at 70%-80%. The proportion of loans that can not provide full cash coverage in the remaining loans should be lower than 25%. Therefore, even if the new guidance is strictly implemented, the bad loan rate will rise by 0.5% to 1.7%.

On the other hand, the new non-performing loans triggered by the local financing platform are still in the controllable range, so the impact of the new provision on the provision of banks will remain the dominant position.

According to 1.7% of the bad rate and 150% provision coverage rate, the provision rate is 2.55%, basically unchanged from the new provision rate regulatory requirements, and will not substantially increase bank provision.

However, the report also reminds us that the rise in credit cost will change the positive and positive contribution of asset quality improvement in 2008 and the provision of large quantities of reserves to profit growth. It is estimated that the provision for bank reserves will be significant in 2011.