China Net Finance reported on January 17 (Reporter Zhang Han) With the pre-disclosure and update of the prospectus of several banks, the banking departments queuing for IPO are ushering in the dawn of A-share listing in 2018. Among them, as the first listed commercial bank in the Northeast (listed in H shares in 2014), Harbin Bank is expected to become the first commercial bank in the region to achieve "A+H" listing, but the continuous increase in the non-performing loan ratio is a "hindrance" that it has to face on its listing.
China Net Finance interviewed Harbin Bank on issues such as core capital , non-performing loan ratio, and received a response saying that relevant annual data and market analysis must be waited until the annual financial report is disclosed and the data shall be subject to the prospectus.
Capital adequacy ratio is worrying
As the first bank in the Northeast to "try the first" in the capital market, in early 2014, Harbin Bank was listed on the main board of the Hong Kong Stock Exchange, becoming the third urban commercial bank in China to successfully land on the Hong Kong capital market. It is also the first listed commercial bank in Northeast my country. The prospectus disclosed by
recently showed that since 2014, Harbin Bank's net profit has maintained double-digit growth rate, with net profit growth rates in 2014, 2015, 2016 and the first half of 2017 being 13.93%, 17.41%, 10.04%, and 10.00% respectively; at the same time, the asset scale has maintained rapid growth. As of the end of June 2017, Harbin Bank's total assets were 546.9 billion yuan, making it the third largest urban commercial bank in the Northeast region; in addition, the bank has also achieved remarkable results in microcredit business and other aspects.
Harbin Bank's capital adequacy ratio and other indicators from the end of 2014 to 2017. Source of data: Harbin Bank Prospectus. Map: China Net Finance.
With the rapid capital consumption caused by the expansion of asset scale and the rapid growth rate of risk-weighted asset , indicators such as Harbin Bank's core tier 1 capital adequacy ratio experienced continuous declines in 2015 and 2016. Although it rose in the first half of 2017, the core tier 1 capital indicators are still close to the regulatory red line.
As of the end of June 2017, Harbin Bank's core tier 1 capital, tier 1 capital adequacy ratio and capital adequacy ratio were 9.46%, 9.48% and 12.02%, respectively, down 0.88, 0.86 and 1.24 percentage points from the same period last year. According to the capital regulatory requirements announced successively by the China Banking Regulatory Commission, the capital adequacy ratio of non-systemic importance banks should not be less than 10.5%, the Tier 1 capital adequacy ratio should not be less than 8.5%, and the core Tier 1 capital adequacy ratio should not be less than 7.5%.
Harbin Bank said that based on the above regulatory requirements and considering its own needs, it has formulated a capital adequacy ratio target for 2013-2018. Without adjustments to the regulatory requirements, the capital adequacy ratio should be kept at no less than 10.5%, the Tier 1 capital adequacy ratio should not be less than 8.5%, and the capital adequacy ratio level should be strived not to be lower than the average of similar banks.
Harbin Bank pointed out in its prospectus that in addition to measures such as enhancing the ability to supplement endogenous capital, the bank plans to supplement core tier 1 capital at the right time, that is, to achieve the initial public offering of A-shares, and after listing, it will supplement core capital through a variety of equity financing methods based on capital needs, and create conditions for further issuance of affiliated capital tools. One year after the listing of
H shares, Harbin Bank officially launched its A-share IPO plan, and has been queuing for nearly three years. The queuing period was not smooth: in early 2016, Harbin Bank was suspended for review because of "incomplete application documents, etc., which resulted in the inability to continue the review process."
This time it is planned to be listed on the Shanghai Stock Exchange. Harbin Bank's main purpose is to supplement the capital of : The bank's A-share IPO plans to issue no more than 3.666 billion shares, and the net amount of funds raised from the issuance after deducting relevant issuance fees will be used to supplement the capital of the bank.
China Net Finance interviewed Harbin Bank on issues such as the pressure and forecast of the core capital of Harbin Bank, and the future trend of the non-performing loan ratio. It received a response that relevant annual data and market analysis must wait until the annual financial report is disclosed and the data shall be provided, and the prospectus shall prevail.
Deputy Director of the Institute of Finance and Securities of Renmin University of China Zhao Xijun pointed out that as long as banks expand their business and increase the scale of loans, they must increase their capital.It is more convenient to raise RMB capital in the A-share market, especially under the premise of overall economic structural adjustment and "deleveraging", it is very urgent for commercial banks to supplement capital.
Non-performing loan ratio has been rising year by year
In the process of listing of commercial banks, asset quality has always been the focus of attention. Looking at the vertical perspective, Harbin Bank's non-performing loan ratio has shown a significant growth trend in recent years. As of the end of June 2017, the end of 2016, the end of 2015 and the end of 2014, Harbin Bank's non-performing loan ratios were 1.65%, 1.53%, 1.40% and 1.13%, respectively.
In this regard, Harbin Bank explained in its prospectus that the increase in the non-performing loan ratio is mainly due to changes in the macroeconomic environment and regional economic environment that have caused some enterprises to decline in profitability and insufficient repayment capacity, which has led to a decline in the quality of the bank's loans.
Among them, Harbin Bank's non-performing loan ratio at the end of June 2017 was 1.65%, up 12 basis points from the end of last year, significantly higher than the average level of 1.51% of urban commercial banks in the country; the loan ratio of attention was 2.97%, up 36 basis points from the end of last year; the loan impairment loss reserve ratio was 2.77%, up 22 basis points from the end of last year.
In the 2017 semi-annual report, Harbin Bank also mentioned that "the loan non-performing loan rates of small and micro enterprise legal persons and small and micro enterprise natural persons are relatively high for customer groups with strong sensitivity to capital flow." This has caused the rise in the non-performing loan rate and the loan ratio of attention.
data shows that in recent years, the proportion of the bank's microcredit balance in the total amount of its customer loans has remained above 60%. At the same time, the interest income of microcredit loan business accounts for more than 70% of the loan interest income during the same period. It is worth noting that as of the end of June 2017, the bank's micro-credit non-performing loan balance accounted for 91.56% of the bank's total non-performing loans.
Regional Economic and Environmental Factors has a great impact on local banks. As of the end of June 2017, Harbin Bank's loans to borrowers from the Northeast , Northeast region of China accounted for 56.30% of the total loans and advances issued by the Bank. After 2013, the economic growth rate in the Northeast region showed a downward trend, with a slowing trend exceeding the national average. There were certain problems in fixed asset investment and industrial production in the region, which had a certain impact on the financial industry.
It is understood that in recent years, Harbin Bank has been breaking through regional restrictions and extending its business tentacles across the country. As of June 30, 2017, the deposit balances and loan balances of the bank's five branches outside the province accounted for 39.85% and 47.28% of the bank's total deposits and loans respectively, with an average annual compound growth rate of 34.15% and 23.43% respectively from 2014 to 2016.
From the industry perspective, as of the end of June 2017, the non-performing loans issued by Harbin Bank in company loans were mainly concentrated in wholesale, service and manufacturing industries. In the above industries, non-performing loans accounted for 56.22% and 22.10% of the total loans of non-performing companies respectively; the non-performing loan ratios were 3.49% and 3.09% respectively. Harbin Bank said that the bank is adjusting the structure of the loan industry and withdrawing from high-risk industries such as backward production capacity.
edit / Wubing
