Winter Has Arrived Early for Banks as Assets Fall, Bad Debts Rise

Provincial GDPs are rolling out (with the northeast yet to report) and Chongqing leads the way with the fastest 9 month growth rate of 11%.

Sina: 14省份前三季度GDP出炉 京沪增速低于全国水平

The fast GDP growth isn't helping Chongqing's banking system though, where winter has come early.

According to the Chongqing Banking Bureau released October 15 in Chongqing banking financial institutions statistical indicators, the state-owned and big listed firms in Chongqing, in the third quarter asset size shrinkage occurs, bad debts accelerated, net profit growth is also slowing, these two types of banks in the most prominent.
The headers across the top are end of Q2 total, change from end of 2014, end of Q3 total, change from end of 2014. The first two types of banks, SOE and listed banks, show asset contraction. City banks and rural financial institutions have seen assets increase. The numbers are in units of 100 million yuan.
Another city seeing asset shrinkage is the export powerhouse city of Ningbo, in Zhejiang province.
Although the changes seen from simple data structures banking assets in the region, but in the third quarter asset size shrinkage phenomenon also appears in Ningbo City, Zhejiang Province.
Data show that, shares of Bank of Ningbo City, with total assets of city commercial banks have appeared decline in the third quarter, in which total assets by the end of June stock line of 503.839 billion yuan fell to 486.266 billion yuan, with total assets of city commercial banks 651.012 billion yuan by the end of June fell to 650.845 billion yuan.
Are exporters hoarding US dollars offshore?
The phenomenon is not expected to be isolated in Chongqing and Ningbo:
Seen by a moderate slowdown in overall credit growth, shrink the size of the assets will not be a regional phenomenon, and may even appear in more cities.
Back to Chongqing, here's the numbers for bad debts, format the same as the table above:
State owned bank bad debts up 32% in Q3 alone and already up 76% on year-end totals. The net increase was more than double the increase in Q2. The listed banks are a little better, smaller banks and rural institutions better, yet still not great with a 10% increase in the quarter. Listed banks in Chongqing are far worse with their total increase this year, with bad debts up 143% from year end.
Banking asset quality showed significant pro-cyclical when the economy downward pressure increases, the accumulation of increasingly prominent structural contradictions, the asset quality of the banking industry is facing challenges.

Huge economic downward pressure, especially in the "three superimposed" stage, as digestion and stimulate policy implementation had massive growth of credit, some of the potential risks to the banking sector began to emerge and become non-performing assets.
Profits are also taking a hit. This time the second columns are showing the year-on-year change for 6 month and 9 month profit totals.
Again, the smaller banks are doing better, the larger banks are experiencing accelerating slowdowns.

Earlier today I wrote Chinese Recession Ready to Move Into Services.

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