Economic Observer Reporter Hu Yanming On May 20, the "Overview of the 2020 First Quarter Performance of 36 Listed Banks in China" released by Ernst & Young showed that in the first quarter of 2020, the net profit of 35 A-share listed banks and 1 H-share listed bank that disclosed quarterly reports totaled RMB 495.987 billion, a year-on-year increase of 5.03%, a decrease of 2.35 percentage points from the growth rate in the first quarter of 2019.
Compared with some loss-making industries, domestic listed banks achieved positive growth in the first quarter. Xu Xuming, partner of EY Financial Services, told the Economic Observer reporter that there are three main reasons: First, asset scale has expanded, listed banks have increased credit supply in response to government regulatory requirements and support enterprises to resume work and production in the fight against the epidemic; Second, the growth rate of cost expenditure has slowed down. During the epidemic, bank employees worked from home and outlets suspended operations, and the decline in travel expenses and marketing expenses has led to a year-on-year increase of bank cost expenditures by less than 3%; Third, asset quality remains stable, and the non-performing rate has not increased significantly.
On the same day, Ernst & Young simultaneously released the report "Review and Future Outlook of Chinese Listed Banks in 2019" showing that in 2019, listed banks achieved a total net profit of RMB 1.748.36 billion, a growth rate of 7.32%. Thanks to the accelerated growth of operating income and the slowdown in provisions and provisions for , listed banks' net profit growth has rebounded after experiencing a decline in 2018.
operating performance fluctuations increased
EY said that after experiencing a low growth rate in 2017, the growth rate of operating income in 2018 and 2019 has increased significantly. Among them, due to the implementation of new asset management regulations and the reduction of fees and concessions on the real economy, the net income of handling fees and commissions of listed banks increased by only 0.28% in 2017, and even decreased by 1.45% in 2018. In 2019, thanks to the listed banks' promotion of wealth management business transformation, increasing the issuance scale of net value wealth management products that meet the requirements of the new asset management regulations, and the rapid growth of bank card business, the growth rate of handling fees and commissions rebounded to 9.66%.
From the perspective of loan impairment loss , the overall growth rate of listed banks in the past three years was 7.27%, 28.79% and 11.12%, respectively. Among them, the growth rate of urban commercial banks in the past three years was 0.92%, 75.62% and 12.70%, respectively. The growth rate of rural commercial banks in the past three years was -21.89%, 103.04% and 9.18% respectively in the past three years, respectively, with particularly obvious fluctuations.
volatility is also reflected in the growth rate of asset and liability scale. In the past three years, the growth rate of asset scale of listed banks has been 7.02%, 6.53% and 8.91% respectively. Among them, the growth rate of national joint-stock banks has continued to rise, while urban commercial banks have continued to decline, while large commercial banks and rural commercial banks have experienced first decline and then rise.
In 2019, listed banks strengthened credit risk prevention and control and increased the write-off and disposal of non-performing assets, and the average non-performing loan ratio dropped from 1.52% at the beginning of the year to 1.46% at the end of the year. However, different types of listed banks have differentiated, with the non-performing loan ratios of large commercial banks and national joint-stock banks declining, while the non-performing loan ratios of urban commercial banks and rural commercial banks increasing. "In terms of the business structure of
, in 2019, the proportion of listed banks plus year-end loans to total assets reached 52.93%, an increase of 1.43 percentage points from 51.50% at the end of 2018, and the proportion of non-standard investment continued to decline; expanding core liabilities, the proportion of deposits to liabilities increased, and interbank liabilities continued to decline. Deeply cultivating retail business, the proportion of retail business revenue, assets and liabilities increased by 0.73 percentage points, 0.99 percentage points and 1.26 percentage points respectively. Lin Anrui pointed out: "In the future, listed banks need to further optimize their business structure, expand their income sources, and enhance their risk resistance. ”
Reasons for the positive growth of the performance of listed banks in the first quarter
From the perspective of the growth rate of net profit of 36 listed banks in the first quarter, the year-on-year increase of 5.03%, which slowed down by 2.35 percentage points compared with the growth rate of the first quarter of 2019. In terms of operating income, it increased by 7.23% year-on-year, which also slowed down compared with the same period in 2019.
Xu Xuming told the Economic Observer reporter that the positive growth of listed banks' performance is mainly due to several reasons: one is the expansion of asset scale, and the other is the slowdown in cost expenditure growth, and in terms of non-performing loan ratio, credit assets remain stable.The expansion of interest rate hike assets was mainly due to the fact that listed banks responded to government regulatory requirements in the first quarter to increase credit supply and support enterprises to resume work and production in the fight against the epidemic. The corresponding net interest income increased by 8% year-on-year. On the other hand, due to the suspension of business at home office outlets of banks during the epidemic, travel expenses and some marketing expenses were declining, the growth rate of bank cost expenditures was slowing down. The cost growth data of listed banks in the first quarter increased by less than 3% year-on-year.
In addition, due to the stability of asset quality, although considering the impact of the epidemic, banks increased by 17% year-on-year when they made provisions for expected credit losses. But you may also notice that some banks in the United States have very high provisions in the first quarter, far higher than the level of China's banking industry. Therefore, based on the above factors, the profit growth of domestic listed banks has increased.
According to , the China Banking and Insurance Regulatory Commission recently disclosed that at the end of the first quarter of this year, the national non-performing loan ratio of commercial banks was 1.91%, up 5 basis points from the end of last year. The balance of non-performing loans of 36 listed banks counted by EY increased at the end of the first quarter, but the weighted average non-performing loan ratio was basically the same as at the end of last year.
Xu Xuming told reporters that the asset quality of the banking industry remained stable in the first quarter for several reasons. On the one hand, banks have implemented temporary arrangements for delayed repayment of principal and interest payments for small and medium-sized enterprises affected by the epidemic due to temporary difficulties, which has alleviated the financial pressure of enterprises to a certain extent. On the other hand, as enterprises resume work and production, the situation of some enterprises has also improved. The non-performing loan ratio of the banking industry increased in the first quarter. It should be said that it is within everyone's expectations. The epidemic will undoubtedly put some pressure on the asset quality of the banking industry.
"But we must also see that the banking industry's ability to resist risks is also strengthening. Since 2018, supervision has guided banks to consolidate asset quality and downgrade loans that are overdue for more than 90 days to bad." Xu Xuming said that this requirement that large banks may implement is more stringent, and generally, overdue for more than 60 days to bad. The ratio of loans overdue for more than 90 years and non-performing loans of listed banks continues to decline. It dropped from 79% at the end of 2018 to 70% at the end of 2019.
Xu Xuming also said that in addition, listed banks are also continuing to increase their efforts to dispose of non-performing assets. According to EY statistics, the amount of non-performing loans written off and disposal of listed banks in 2019 increased compared with 2018. At the same time, the provision level of the banking industry is also improving. In 2019, the loan provision coverage ratio and loan allocation ratio of listed banks increased by 14.47 percentage points and 0.08 percentage points respectively. Therefore, despite the impact of the epidemic, the loan non-performing loan rate of listed banks may rise in the second half of the year, we believe that the risks are still controllable.
